Carberry Manufacturing is a newly formed company with its head office on St. Lucia Avenue in...

 

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Carberry Manufacturing is a newly formed company with its head office on St. Lucia Avenue in New Kingston. Its factory is located in Old Harbour, St. Catherine. The company manufactures a line of natural juices and started operations one year ago. It currently employs 120 line staff and runs three 8-hour shifts. Each shift is managed by one operation supervisor and Mr. John Carberry, son of the company's Executive Director, who oversees the operations of the plant. His office is in New Kingston. The supervisors are responsible for recruiting staff and sending the personal data of the new recruits to the HR Department in New Kingston along with the pay rates. The pay rates are set by the supervisors based on the skills and years of experience of the new recruit. A copy of the personal data form, an ID form and a passport sized photograph are sent to the IT department to generate swipe cards for the new recruits. Attendance is monitored via the swipe cards but it takes two weeks to process the cards before they are returned to the factory. They are received and distributed by the supervisor on duty. Since the start, over five employees have been dismissed and their swipe card retrieved but not destroyed. They are kept in the desk that Mr. Carberry uses when he comes to the plant for inspection. There is no one assigned to inform payroll when staff is terminated as the supervisors feel that the absence of the name of the staff from the swipe card report is sufficient notification to payroll. Based on production demands, persons may be asked to work a double shift. The supervisors prepare the overtime forms and send them to John for approval. The forms are then sent to payroll for processing. Ms. Janet Carberry is the person responsible for preparing cheques at the head office. There is only one bank account held at Sagicor at this time. Francine, a part-time student from UTech, assists with entering the overtime hours into the payroll software. Her father is one of the supervisors at the factory and she has only been working there for three months. Once Janet is notified by Francine that the overtime hours are posted, Janet runs the payroll and prints the payroll register. Janet also uses the personnel action form to put on the rates for the new recruits along with the swipe card report from the IT department. She only uses the swipe card report to confirm the names of the employees to be paid each fortnight. Francine assists her in updating the employee records in the sub-ledger. Janet then prepares the payroll cheques and she and her brother signs them. The courier is then called to deliver the cheques to the factory. Any of the supervisors can receive the cheques and distribute them. The cheques for the night shift crew are left in the drawer of the supervisor who received the package from the courier. They are subsequently distributed by the night operations supervisor. Next week, Janet will be teaching Francine to run the payroll. Required: Analyze the internal control weaknesses in the system. Model your responses according to the six categories of physical control activities specified in SAS 78. Carberry Manufacturing is a newly formed company with its head office on St. Lucia Avenue in New Kingston. Its factory is located in Old Harbour, St. Catherine. The company manufactures a line of natural juices and started operations one year ago. It currently employs 120 line staff and runs three 8-hour shifts. Each shift is managed by one operation supervisor and Mr. John Carberry, son of the company's Executive Director, who oversees the operations of the plant. His office is in New Kingston. The supervisors are responsible for recruiting staff and sending the personal data of the new recruits to the HR Department in New Kingston along with the pay rates. The pay rates are set by the supervisors based on the skills and years of experience of the new recruit. A copy of the personal data form, an ID form and a passport sized photograph are sent to the IT department to generate swipe cards for the new recruits. Attendance is monitored via the swipe cards but it takes two weeks to process the cards before they are returned to the factory. They are received and distributed by the supervisor on duty. Since the start, over five employees have been dismissed and their swipe card retrieved but not destroyed. They are kept in the desk that Mr. Carberry uses when he comes to the plant for inspection. There is no one assigned to inform payroll when staff is terminated as the supervisors feel that the absence of the name of the staff from the swipe card report is sufficient notification to payroll. Based on production demands, persons may be asked to work a double shift. The supervisors prepare the overtime forms and send them to John for approval. The forms are then sent to payroll for processing. Ms. Janet Carberry is the person responsible for preparing cheques at the head office. There is only one bank account held at Sagicor at this time. Francine, a part-time student from UTech, assists with entering the overtime hours into the payroll software. Her father is one of the supervisors at the factory and she has only been working there for three months. Once Janet is notified by Francine that the overtime hours are posted, Janet runs the payroll and prints the payroll register. Janet also uses the personnel action form to put on the rates for the new recruits along with the swipe card report from the IT department. She only uses the swipe card report to confirm the names of the employees to be paid each fortnight. Francine assists her in updating the employee records in the sub-ledger. Janet then prepares the payroll cheques and she and her brother signs them. The courier is then called to deliver the cheques to the factory. Any of the supervisors can receive the cheques and distribute them. The cheques for the night shift crew are left in the drawer of the supervisor who received the package from the courier. They are subsequently distributed by the night operations supervisor. Next week, Janet will be teaching Francine to run the payroll. Required: Analyze the internal control weaknesses in the system. Model your responses according to the six categories of physical control activities specified in SAS 78.

Answer rating: 100% (QA)

1 Physical Access Controls There is no proper physical access control in place for the swipe card sy... View the full answer