You are working on the audit of your client Sweetie Ltd for the year ended 31 March 2X11.

The company employs one hundred workers in a doughnut manufacturing plant. Wages are paid weekly.

The following procedures are carried out:

• Employees clock cards are signed by supervisors and brought to the wages office every Monday morning.

• Hours are taken from the cards. Overtime hours are calculated and entered on an overtime sheet which is then used to calculate overtime payments.
• The overtime sheet is authorized by the production manager.
• Wages are prepared using a standard computerized wages software package.
• Standard hours and overtime hours are entered into the payroll using the input screen.
• Any amendments to employees’ details, e.g. changes of address or tax code, are entered on each employee’s computer file by any of the wages clerks.
• Details of any new starters are entered into the system by any of the wages clerks.
• Leavers are removed from the system once their final week’s wages have been calculated.
• The payroll is processed and then authorized by the production manager.
• It is then passed to the accounts department who prepare BACs payments for each employee.
• Wages are paid on Friday so the payroll has to be prepared in time to ensure employees are paid promptly.

Questions:-

1. The audit manager has asked you to complete the ICQ below based on the payroll system details set Out above.

Transcribed Image Text:

FIGURE 10.4 Internal control questionnaire Client name Period to WAGES SYSTEM Prepared by Date Reviewed by Date Control procedures Process Is there an individual file recording each employees details? Are rates of pay authorized by a responsible official? Are there procedures to remove leavers from the payroll as soon as they have been paid their final wages? Are there procedures to ensure new starters are included on the payroll correctly? Is access to the payroll master file restricted? Are there procedures to ensure that changes in employees' details are properly recorded? Is the payroll software a standard package? (Record details) Is there a wages preparation timetable? Do employees have to record start and finish times? Are overtime rates approved by a responsible official? Are hours worked authorized by a responsible official of the company? (record details) Is the payroll approved by a responsible official before wages are paid? Are employees paid by bank transfer? Are the people involved in making the payments different to those who prepare the payroll? Yes No N/A Comments