Payroll: Risks and controls

The following are some of the processes that typically run before, during and after a payroll cycle: - Employees record their hours worked. - The supervisor reviews and signs off on each employee's time records. - A human resources officer updates employee files after receiving authorized records of overtime and leave (vacation, sick, etc.) from the supervisor. He then forwards the approved records to the payroll officer in the accounting department. - The payroll officer determines the gross pay, applies deductions and calculates the net pay. He then sends the final payroll for the comptroller's approval. - Payments are issued to employees via their preferred delivery method (check or direct deposit). - Payroll entries are generated. - Withholdings for payroll taxes and Social Security and Medicare taxes are remitted respectively to the Treasury Department and the Internal Revenue Service, also known as the Internal Revenue Service. - A final payroll record is generated and shared with the cash disbursement department, where it is filed. Depending on the size of the company, this process can be done entirely manually or electronically.

Part II: Answer the following questions about the theory (case) presented: 1. Create a flowchart of the payroll system, assuming that the entire process will be performed electronically in its entirety. Divide the diagram into the processes related to the employee, the supervisor, and the payroll and human resources departments.