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Task:

Using the narrative description, evaluate Southern Packing Ltds (SPL) Payroll and human resources subsystem. In your evaluation you must:

1. Identify five deficiencies in SPLs Payroll and human resources subsystem. Ensure you explain the potential impact of each deficiency identified.

2. For each deficiency, you identified in Task 1, suggest a control to mitigate the weakness. Ensure you explain how the control mitigates the weakness.

Payroll and human resources subsystem Case study: Southern Packing Ltd

SPL employ a core of staff year-round mainly in administration roles. During the packing season SPL employ a range of short-term employees, some work for the firm for a few weeks while others are employed for the entire packing season, which lasts several months. Some people return every packing season, others work for a single season or part season. The selection of short-term employees, payment of all wages and PAYE, and any queries about employment matters are handled by the HR Manager and the Wages Administrator.

For full time roles, applicants are interviewed by the CEO and, once successful, their details are recorded and verified by the HR manager and recorded in the Approved Employees file. Due to the shortage of employees, prospective short-term employees are interviewed by the HR manager and if they are willing to do the job and seem physically fit, they are hired. The Wage Administrator records each successful candidates name and personal details including an email address, IRD number, bank account details, KiwiSaver information, and mobile phone number in the Approved Employee file.

Full time staff are paid for a set number of hours each week, so they do not complete timesheets each week. If they have a days annual leave or sick leave the staff member emails or calls the wages administrator to let them know. The wage administrator records the leave details in the payroll system the firm uses.

Short term staff are required to complete a timesheet each day they are working. The number of staff required each day varies. After checking the packing schedule, the pack house manager creates a work list which lists the staff required for the next day, then texts each short-term staff member on the list to let them know they are required for work the next day. The pack house manager always schedules 10% more staff than needed to ensure enough staff attend to meet the days packing requirements. This is done because there are always some staff who do not show up each day.

When staff arrive, they collect a paper daily timesheet from a tray outside the pack house managers office. Short term staff record the time they arrived and the time they finished for the day, as well as any unpaid breaks taken during the day on the daily timesheet.

When staff leave, they are required to hand the daily timesheet to the Pack House Manager. The employee is required to sign the timesheet to indicate it is an honest record of the hours worked and to confirm they were at work that day this prevents staff submitting a timesheet for someone else. The paper timesheets are filed in a temporary file in the Pack House Managers office.

On Monday each week, the wages administrator collates the daily timesheets, calculates the total hours worked by each staff member for the previous week and completes the calculation of each employees pay. Payroll software is used to complete the calculations and electronically records details of hours worked, pay rate, total gross pay, PAYE deductions, any other deductions including KiwiSaver, and the net pay for each employee.

Once calculations are completed two copies of the wages list is printed and is given to the HR manager who reviews the planned payments and approves the payments and returns the approved wages list to the Wages Administrator. The Wages Administrator files the approved wages lists, completing Inland Revenue Pay Day Filing processes. The Wages Administrator then exports the wages list to the online banking system to set up the wage payments in the online banking system and authorises the payments in the online banking system. All staff are then emailed a payslip. The CEO logs on to the online banking system and authorises the wage payments. The approved wages list is then filed with the original copy of the wages list.

Each Wednesday the wages administrator reviews the wages payments made and lists any differences or errors on an exception report which is filed with the Approved Wages list.

Note: SPLs online banking system is set up to require payments to be authorised by two signatories before being processed.

Task:

Using the narrative description, evaluate Southern Packing Ltds (SPL) Payroll and human resources subsystem. In your evaluation you must:

1. Identify five deficiencies in SPLs Payroll and human resources subsystem. Ensure you explain the potential impact of each deficiency identified.

2. For each deficiency, you identified in Task 1, suggest a control to mitigate the weakness. Ensure you explain how the control mitigates the weakness.