payroll, control and risk

The local community feels that secondary school education is a necessity in our society and that lack of

education leads to a number of social problems. As a result, the local school board has decided to take

action to reverse the rising dropout rate. The board has voted to provide funds to encourage students to

remain in school and earn their high school diplomas. The idea is to treat secondary education like a job

and pay students. The board, however, could not agree on the details for implementing this new plan.

Consequently, you have been hired to devise a system to compensate students for staying in school and

earning a diploma.

As you devise your compensation scheme, be sure it meets the following general control objectives for the

payroll cycle:

All personnel and payroll transactions are properly authorised.

All employees are assigned to do productive work, and they do it efficiently and effectively.

All transactions are accurately recorded and processed.

Accurate records are maintained.

All disbursements are proper.

Write a proposal that addresses these five questions:

a. How should the students be compensated (e.g., for attendance, grades)?

b. How and by whom will the payments be authorised?

c. How will the payments be processed?

d. How should the payments be made (e.g., in cash or other means)?

e. When will the payments be made?