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- August 5, 2021 at 6:34 am #630430
CONTROL DEFICIENY –
The payroll manager reviews the bank transfer listing prior to authorising the payments and also amends the payroll records for any changes required.There is a lack of segregation of duties as it is the payroll team which processes the amounts and the payroll manager who authorises payments. The manager could fraudulently increase the amounts to be paid to certain employees and process this payment as well as amend the recordsCONTROL RECOMMENDATIONS-
The payroll manager should not be able to
process changes to the payroll system as well as authorise payments. The authorisation of the bank transfer listing should be undertaken by an individual outside the payroll department, such as the finance directorDOUBT-
1) woudn’t this control be ineffective since if the payroll manager fraudulently increase the amount to be paid for certain employees the payroll record would include this increased amount and so would the bank listing so even if the finance directors check bank listing(list of payment to be made) and payroll record they would agree so the FD might end up authorizing the increased amount to be paid?2) How is this an effective control?
3) are the list of payment to be made with reference to payroll records?
THANKS YOU IN ADVANCE
August 5, 2021 at 7:42 am #630444But the finance director would know, for example, how many people there should be on the payroll so should notice/query if there are potentially any “ghost” employees – also if the list of employees who are all on the same pay grade goes something like this:
….
D – $500
E – $600
F – $550
G – $940
H – $550
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