Bluth Corporation manufactures and sells engine parts for large industrial equipment. The company employs over $1,000$ workers for three shifts, and most employees work overtime as required. As a part of your audit of the Bluth Corporation's payroll procedures, you have noted the following:

The Human Resources Management department determines wage rates for all employees. The process begins when a form authorizing the addition of a new employee to the payroll master file is sent to the payroll coordinator for review and approval. Once the information about the new employee in entered in the system, the software automatically calculates the overtime and shift differential rates for that employee.

A local accounting firm provides Bluth Corporation with monthly payroll tax updates, which are used to modify the tax rates.

Employees record their time worked on time cards. Every Monday morning, the previous week's time cards are collected from a bin next to the time clock, and new time cards are left for employees to use. The payroll department manager reviews the time cards to ensure that hours are correctly totaled; the system automatically determines whether overtime has been worked or a shift differential is required.

The payroll department manager performs all other activities pertaining to payroll accounting $($record$-$keeping$)$ and reconciliations.

The system automatically assigns a sequential number to each payroll cheque. The cheques are stored in a box next to the printer for easy access.

After the cheques are printed, the payroll department manager uses an automatic cheque$-$signing machine to imprint the authorized signature on each cheque. The signature plate is kept in the third drawer of the payroll manager desk hidden underneath a pile of paper napkins.

After the cheques have been signed, the payroll manager distributes the paychecks to all first$-$shift employees personally. Paychecks for the other two shifts are handed over to the shift supervisors for distribution.

The payroll master file is backed up once a year.