Question

Examine the following case from Turner, Weickgenann, and Copeland, (2017): When a new employee is hired, the human resources department completes a personnel action form and forwards it to the payroll department. The form contains information such as pay rate, number of exemptions for tax purposes, and the type and amount of payroll deductions. When an employee is terminated or voluntarily separates from Rossi, the human resources department completes a personnel action form to indicate separation and forwards it to the payroll department. Each employee in the production department maintains his[/her] own time card weekly. Employees fill out their time cards in ink each day, and at the end of the week, the time cards are forwarded to the payroll department. Employees in the payroll department use the time cards and employee records to prepare a weekly paycheck for each employee who has turned in a time card. A copy of the payroll checks is forwarded to the accounts payable department, and the original payroll checks are forwarded to the cash disbursements department to be signed. The payroll department updates the payroll subsidiary ledger. After the paychecks are signed, they are given to department supervisors to distribute. Any unclaimed checks are returned to the payroll department. (p. 407) Perform analysis on the payroll process that examines the internal control strengths and weaknesses of the process; include a process map in your analysis. Provide suggested improvements for any weaknesses identified, taking into consideration how IT systems could benefit the processes described.

Answer 1

The payroll process of the organization from preliminary assessment of facts provided in the document suggests that the organization has a robust payroll process. However, a closer look in the process will help us understand the various weaknesses in the internal control of the payroll process. The fact that the employees themselves fill their own cards with ink each day after is one of the most crucial weakness in the process. At the time of appointment and separation the employee forms though are filled up but should also be verified by the HR department to ensure that the necessary fields in the employee forms are correctly filed. Apart from that the HR department should also verify the weekly and monthly salaries and wages of the employees with the relevant wage rates and number of hours worked by them.