c$)$ You are the audit senior of Cold Front Ltd$,$ a frozen food distributor. You are conducting audit work on their payroll system and have ascertained the following information regarding the system for the year ended $31$ December $2021$:

The administrative staff record the number of hours worked using a clocking in $/$out system. Generally, the staff work a standard $8-$hour day shift, swiping their ID cards on arrival and at the end of each day. If a staff does not swipe out at the end of the day the system automatically clocks them out. To claim overtime, employees need to complete an "overtime claim" form and submit it to the payroll clerk.

Jane Errol is the payroll clerk and is responsible for setting up and maintaining all employee records and processing the monthly payroll. She is also responsible for making changes to the computerised payroll system in respect of pay rates and leave entitlements:

Deductions are calculated by the computerised payroll system to reflect gross pay, statutory deductions, and net pay. Jane Errol checks the deductions on a periodic basis. Monthly, a list of net cash payment for each employee is generated and authorised by the Financial Controller before the list is sent to the bank for employees to be paid by bank transfer.

Required

As the audit senior of Cold Front Ltd$,$ write to management in respect of the payroll system:

i$.$

ii$.$ Explaining the possible implication of these deficiencies; and

iii. Suggesting a recommendation to address each deficiency.

$(9$ marks$)$