Auditing

Transaction-level controls over the payroll cycle TTT Ltd. Has had strong growth over the past three years. The company is involved in mining in northern Canada. While revenues have been increasing, the costs of mining at its remote locations have also increased. An investigation revealed that the controller had added a fictitious employee and had defrauded TTT by collecting and cashing false payroll cheques. The CEO fired the controller and, instead, hired a new accountant with a mandate to cut costs. The accountant eliminated a number of administrative staff because these employees did not contribute to the income-earning process. Under the new office structure, only the personnel manager can authorize the hiring of new employees and their pay rate, and only the accountant can prepare and distribute the payroll cheques. Required Does me new accountant's plan provide strong internal controls over payroll? Justify your answer by stating the strength(s) and weakness(es) of the new plan. Source: copy CGA-Canada. now CPA Canada. Reproduced with permission