Equity bank ltd is one of the largest banks in

Kenya that has been operating in Kenya for more

than 10 years. The general ledger transaction cycl

e is one of the main pr

ocesses that would be

found within the accounting information systems for Equity bank ltd.

Required;

Explain two other management reports other th

an the two financial statements of Income

statement and Balance sheet that can be provid

ed by the general ledger

transaction cycle for

Equity bank ltd.

(2 marks)

(b)

The following information has been extracted fr

om the payroll transaction cycle for Mr. Price

Kenya Ltd which is a company that sells cl

othes and other access

ories in Kenya. The

management of the company want

s to use the provided informa

tion to evaluate the current

payroll transaction cycle system with th

e aim of identifying areas of weakness.

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The payroll transaction cycle is as follows;

After hiring a new employee, th

e human resource department

makes two copies of the

employee's letter of employment and one copy

is given to the payroll accountant who

files them under the physical pers

onal file for

that employee.

A copy of the following documents is

also provided by the Human Resources

department to the payroll accountant (KRA

PIN, NHIF, NSSF) which will be used in

calculation of the Net pay of that em

ployee under the statutory deductions.

The employees in the follo

wing departments are employe

d as full-time employees.

(Finance department, Human resources depa

rtment, Transport department, and Stores

department)

Most of the employees w

ho are employed as part-time

employees work in the

production department and marke

ting department. The time da

ta is recorded in each

department using manual physical time car

ds for each employee. Each employee fills

out their own time cards with the supervisors signing the forms at the end of each day.

All the employees are employed

under part time basis. If

the night shift employees

forget to sign-out using thei

r ID cards the time is recorded manually and the day time

shift supervisor signs th

e forms in the morning.

At the end of the month, the

payroll clerks accountant enters the time card data into a

payroll file for processing. Before the pa

yroll accountant calculates the payroll, a

supervisor goes through the payr

oll Masterfile to ensure that the time card data is

recorded accurately.

Before the payroll is processed for the

current month, human resources send data on

personnel changes, such as increases in pay rates and new employees. The payroll

clerks enter this information into the pa

yroll master file, so it is available for

processing. Sometimes mistakes are made by

the human resources

department by

recording the wrong pay rate or an employee

has left and the department forget to

remove the record.

The payroll for the month is then proce

ssed and individual em

ployee paychecks are

generated. Several important reports are also generated for management. In addition,

the payroll accountant also pr

ocesses the deductions for

the month and remits the

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money via bank transfer. The payroll acc

ountant is not require

d to prepare any

payment voucher for any cash disbursements.

Required;

i)

Identify two weaknesses and ex

plain the control procedures

that can be adopted to

mitigate the weakness from Price Kenya Lt

d payroll transacti

on cycle described

above.