INFORMATION

The SBG Travel payroll function uses MYOB and has the following characteristics:

• Managing Director authorises new and changed individual employment offers.
• HR Advisor updates the Employee Masterfile for new employees, terminations and changes to pay rate and banking details. Paperwork supporting the changes is filed in the personnel files, with a copy provided to payroll.
• Payroll clerk enters:
• timesheet and leave forms
• Calculates termination pay
• Runs the payroll
• Prepares a package for the Chief Accountant containing:

Payroll report

Audit report of changes to the Employee Masterfile and supporting

paperwork provided by HR

• Copies of all leave forms and termination calculations
• A report comparing the variance between last fortnight's payroll

and this fortnight's payroll

• Chief Accountant:
• checks and approves the payroll package
• creates the EFT payment upload
• presents the payment upload to the Managing Director for approval

QUESTION

1. Document the potential weaknesses in these internal controls over payroll accuracy and prevention of fraud in line with current financial legislation.
2. Make a recommendation that will prevent or detect future instances of the error. In developing the enhanced internal control procedures ensure that they apply to Corporate Governance requirements for the business's internal operations (in this case the payroll system). Use information from your handout to seek and clarify information from at least two (2) other appropriate authoritative sources (e.g. ATO) to inform the recommendations. All sources used, the reason why they were contacted for clarification purposes and the actual information sourced must be supplied as an appendix to this assessment.