Suncity Pty Ltd operates a hotel in the New South Wales ski fields, providing accommodation, bar and
Question:
Suncity Pty Ltd operates a hotel in the New South Wales ski fields, providing accommodation, bar and restaurant facilities for tourists. Casual and part-time wages are a major expense item, particularly during winter, when up to an additional 50 staff are employed.
In order to keep track of casual and part-time wages, Suncity's operations manager, Betty Wilson, prepares a weekly roster (using Excel), showing:
- employee name
- position of employment (e.g. kitchen hand)
- days and hours rostered for the week
- hourly rate
- any additional amounts to be paid (e.g. meal allowances).
The immediate supervisor of each employee is required to sign a hard copy of the Excel spreadsheet on a daily basis, as evidence that the hours were worked as rostered. Any discrepancies (such as additional hours) are recorded on a separate payroll adjustment form (PAF) and co-signed by the employee. The spreadsheet plus any PAFs are forwarded to the payroll officer each Friday and used as the basis for that week's casual and part-time employee payroll. Last year, you tested and placed reliance on controls over casual and part-time wages.
Required:
Assume that you have decided it is appropriate to test internal controls over the relevant transactions.
- How would the information provided above affect the nature, timing and extent of tests of controls in relation to casual and part-time wages?
- Since there were no exceptions detected in previous years, work on internal controls is not required for because last year's evidence will be sufficient. Do you agree? Explain.
- Provide two tests of control for accuracy and two tests of control for occurrence in relation to casual and part-time wages
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton