It is July $2021.$ You are an audit supervisor of Anggerik & Co and are in the process of reviewing extracts of the systems documentation which has been completed on the payroll cycle of Pigeon Courier Company, as well as preparing the audit programmes for the forthcoming final audit for the year ending $30$ September $2021.$ Pigeon Courier Company is a package delivery company which operates from a large distribution centre.PayrollThe company employs $200$ staff of whom $120$ of these staff are delivery drivers. All staff work a standard eight$-$hour shift each day and are paid monthly. All staff members are required to clock$-$in and out using a sequentially numbered key card which contains their unique employee number and name. Sequence checks on the key cards and the data recorded in the clocking$-$in system are carried out by the human resources $($HR$)$ supervisor on a regular basis. The clocking$-$in process is monitored by a camera on entry to the distribution centre and weekly checks are carried out by the department who review the video footage to ensure that no staff member clocks$-$in for someone else. Recordings are kept in date order in the HR department and logged on a spreadsheet together with the name of the person who has reviewed the footage.The clocking$-$in system is directly linked to the payroll system and information regarding the hours worked by the staff is automatically transferred into the payroll system. The payroll system then automatically calculates gross pay, deductions and net pay. The payroll clerk confirms that the transfer of hours and calculations has been done correctly by recalculating a sample of employees gross to net pay. A payroll supervisor then reviews this check which is evidenced by the supervisors signature.All staff are entitled to $22$ days holiday a year. Employees are paid for any holiday which has not been taken at the end of the year. Department managers are required to approve all holiday requests by authorizing employees holiday forms, however this does not always occur.The payroll system is password$-$protected, and the password is changed on a monthly basis by the payroll manager using a random password generator.Once the payroll has been agreed by the payroll supervisor, the payroll clerk provides details of the net pay due to each employee to the financial controller who then prepares and authorizes the bank transfer to be paid to the employees bank accounts.Each month, as part of the month$-$end procedures, the finance director undertakes a payroll account reconciliation and investigates any differences to ensure that the payroll figures have been posted into the accounting records correctly.The companys HR department is responsible for processing starters and leavers using a joiner$/$leaver form to notify the payroll department of the change. On receipt of the joiner$/$leaver form a payroll clerk updates the payroll system. An edit report is generated which records the changes made but this report is not reviewed. Two staff members from the HR department have been absent for some time due to illness. As a result, the operations manager has processed six newly recruited temporary delivery drivers and instructed the payroll department to set up the new employees.Delivery drivers are sometimes required to work overtime, particularly in busy periods. Where overtime is necessary, the operations manager has to authorise overtime in excess of five hours per week.Some temporary delivery drivers receive their wages in cash. The delivery driver collects their pay packet from the finance department when it is ready. The member of staff in the finance department will ask for the delivery drivers name to check that there is a pay packet prepared and, if there is$,$ they provide the delivery driver with their pay packet.The company has to pay employment taxes to the tax authority by the end of each month. Each month the payroll supervisor calculates the total liability due to the tax authority and this is then passed to the financial controller who checks the calculations prior to the payment being made.To encourage delivery drivers to make deliveries on time, the company pays a discretionary bonus to delivery drivers on a quarterly basis. The operations manager decides on the bonus to be paid and notifies the payroll clerk in writing every quarter as to who will receive a bonus and how much it will be$.$As delivery drivers spend the majority of their day driving the company vehicles, they are required by laws to take a $15-$minute paid break in the morning and afternoon, as well as one$-$hour lunch break. The company has no way of monitoring the length of these breaks as the delivery drivers are out on deliverie.

Required:

$($i$)$ Identify and explain FOUR KEY CONTROLS in Pigeon Courier Company$$s payroll system which the auditor may seek to place reliance on; and $($ii$)$ Describe a TEST OF CONTROL the auditor should perform to assess if each of these key controls is operating effectively.