Trillite Ltd. has had strong growth over the past three years. The company is involved in mining
Question:
Trillite Ltd. has had strong growth over the past three years. The company is involved in mining in northern Canada. While revenues have been increasing, the costs of mining at its remote locations have increased as well. An investigation revealed that the controller had added a fictitious employee and had defrauded Trillite by collecting and cashing false payroll cheques. The CEO fi red the controller and, instead, hired a new accountant with a mandate to cut costs. The accountant eliminated a number of administrative staff , because these employees do not contribute to the income earning process. Under the new office structure, only the personnel manager can authorize the hiring of new employees and their pay rate, and only the accountant will prepare and distribute the payroll cheques.
Required
Does the new accountant’s plan provide strong internal controls over payroll? Justify your answer by stating the strength(s) and weakness(es) of the new plan.
Step by Step Answer:
Auditing A Practical Approach
ISBN: 978-1119566007
3rd Canadian edition
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton, Valerie Warren