The Vane Corporation is a manufacturing concern which has been in business for the past eighteen years. During this period, the company has grown from a very small family-owned operation to a medium-sized manufacturing concern with several departments. Despite this growth, a substantial number of the procedures employed by Vane Corp. have been in effect since the business was started. Just recently Vane Corp. has computerized its payroll function.

- The payroll function operates in the following manner. Each worker picks up a weekly time card on Monday morning and writes in his name and identification number. These blank cards are kept near the factory entrance. The workers write on the time card the time of their daily arrival and departure. On the following Monday the factory foremen collect the completed time cards for the previous week and send them to data processing.

In data processing, the time cards are used to prepare the weekly time file. This file is processed with the master payroll file which is maintained on magnetic tape according to worker identification number. The checks are written by the computer on the regular checking account and imprinted with the treasurer's signature. After the payroll file is updated and the checks are prepared, the checks are sent to the factory foremen who distribute them to the workers or hold them for the workers to pick up later if they are absent.

The foremen notify data processing of new employees and termnations. Any changes in hourly pay rate or any other changes affecting payroll are usually communicated to data processing by the foremen.

The workers also complete a job time ticket for each individual job they work on each day. The job time tickets are collected daily and sent to cost accounting where they are used to prepare a cost distribution analysis.

Further analysis of the payroll function reveals the following:

1. A worker's gross wages never exceed \(\$ 300\) per week.

2. Raises never exceed \(\$ 0.55\) per hour for the factory workers.

3. No more than 20 hours of overtime is allowed each week.

4. The factory employs 150 workers in ten departments.

The payroll function has not been operating smoothly for some time, but even more problems have surfaced since the payroll was computerized. The foremen have indicated that they would like a weekly report indicating worker tardiness, absenteeism, and idle time, so they can determine the a mount of productive time lost and the reason for the lost time. The following errors and inconsistencies have been encountered the past few pay periods:

1. A worker's paycheck was not processed properly, because he had transposed two numbers in his identification number when he filled out his time card.

2. A worker was issued a check for \(\$ 1,531.80\) when it should have been \(\$ 153.81\)

3. One worker's paycheck was not written, and this error was not detected until the paychecks for that department were distributed by the foreman.

4. Part of the master payroll file was destroyed when the tape reel was inadvertently mounted on the wrong tape drive and used as a scratch tape. Data processing attempted to reestablish the destroyed portion from original source documents and other records.

5. One worker received a paycheck for an amount considerably larger than he should have. Further investigation revealed that 84 had been punched instead of 48 for hours worked.

6. Several records on the master payroll file were skipped and not included on the updated master payroll file. This was not detected for several pay periods.

7. In processing nonroutine changes a computer operator included a pay rate increase for one of his friends in the factory. This was discovered by chance by another employee.

Required:

Identify the control weaknesses in the payroll procedure and in the computer processing as it is now conducted by the Vane Corp. Recommend the changes necessary to correct the system. Arrange your answer in the following columnar format:

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Control Weaknesses Recommendations