Describe Control Procedures (strengths) Related to Payroll Processing

Describe control procedures (strengths) related to payroll processing

Strengths identified (payroll) Possible test of controls

1. Segregation of functions

Louise McWhorter notify Donald McKenna of personnel changes. Review and test client's procedures for changing employees' records; if IT application, examine application controls.

Review and test personnel files

2. Segregation of duties

Cheryl Palmer does not have any responsibilities to prepare payroll or have access to the payroll records. Observe and evaluate proper segregation of duties.

3. Segregation of functions

Time clock are employed for hourly employees. Observe employees' use of time clock

4. Segregation of duties

Time cards and time reports approved by various supervisors. Inspect time cards presented for approval by supervisor.

5. Authorization

All hires and terminations approved by Larry Lancaster. Review and test client's authorization procedures for each point of authorization in the payroll cycle; if IT application, examine application controls.

6. Authorization

All wage rates are approved by president initials. Observation and direct examination of the approved wage rates.

7. Input controls

All checks paid to employees' are prenumbered. Sequence checking the serially number of payroll checks.

8. Input controls

Cheryl Palmer verifies all payrolls and recalculates for mechanical accuracy in correct amount