Ketum-yum Berhad produces ketumbar sauces. The factory floor is situated alongside its financial, administration and human resources department on the top floor. Freddy, Ketum-yum Berhads financial director was appointed in February and he immediately took measures to improve the companys control environment as he recognised that most elements of it needed improving. Freddy then reviewed the control activities within each functional area of the business and introduced changes to help ensure the achievement of control objectives. He is a strong believer in using computer produced exception reports to highlight possible errors or omissions in processing, and changes introduced included the introduction of these reports wherever appropriate. Prior to Freddys appointment last November, investigations into excessive factory wages payments as reported in the companys annual financial statements, revealed that the financial director at the time had authorised the payment of wages to non-existent factory employees entered onto the companys wages master file. The payments were subsequently diverted into the financial directors personal bank account. Whilst he maintained that the unauthorized payments had been caused by a simple error, the financial director was dismissed from his employment with Ketum-yum Berhad on the grounds that he had committed fraud against the company. Ketum-yum Berhad has 124 factory employees including three production supervisors and a factory manager. The factory manager has overall responsibility for all matters concerning the day-to-day operation of the factory. Except for the production supervisors and the factory manager, all factory employees are paid for each hour worked on a weekly basis in arrears. The former are paid on a monthly basis, together with all other employees through the companys monthly payroll.

Required:

(a) Identify FIVE control activities that should exist to facilitate control over the recruitment of factory employees through to the production of Ketum-yum Berhads weekly payroll for factory employees. For each activity identified above, state the control objective. [20 marks]

(b) Identify FIVE different computer produced exception reports that could be used by Ketum-yum Berhads management to facilitate control over the weekly payroll for factory employees. [10 marks]