Question
Buddy Sdn Bhd is a manufacturer of audio equipments based in Kulim Hi-Tech Park, Kedah. It currently employs 200 employees who worked in various departments.
Buddy Sdn Bhd is a manufacturer of audio equipments based in Kulim Hi-Tech Park, Kedah. It currently employs 200 employees who worked in various departments. The payroll system of Bujang Valley Sdn Bhd is described below.
The employees manually recorded their hours worked on timesheets. Every Friday, the supervisors of their departments collect the timesheets, review and approve them before forwarding these timesheets to the payroll department.
During payroll processing, the individual employee wage rates are manually pulled from the personnel file based on the employee identification number. The payroll clerk manually prepares checks for each employee's approved timesheet.
The payroll clerk then updates the payroll register and sends a copy of the payroll register to the accounts payable clerk who updates the accounts payable ledger. After that, the payroll clerk sends a payroll summary to the general ledger and forwards all paychecks to the cash disbursement department.
The cash disbursement clerk signs the paychecks and forwarded them to the supervisors of the respective departments. The supervisors then distribute the paychecks to each employee under their supervision.
The cash disbursement clerk returned the signed copies of the payroll checks to the payroll department and the payroll clerk matched them against the payroll register before they are filed in the department.
Later, the cash disbursement clerk prepares a list of the verified payroll checks recipients and forwards a copy to the accounts payable department and another copy to the general ledger clerk. The accounts payable clerk uses the verified list to update the accounts payable ledger, while the general ledger clerk uses the list to reconcile against the summary report and posts to general ledger.
a.Required:
Discuss five (5) internal control weaknesses that exist in the payroll system of the company and suggest the improvement that can be implemented. Your answer should be written using the following format:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started