12 - Payroll Cycle

Question 1

how are transactions triggered in the payroll cycle?

Answer 1

by the hiring of employees who will be paid remuneration

Question 2

how do salaries work?

Answer 2

• fixed, predetermined amount
• usually not affected by hours worked
• paid monthly by EFT

Question 3

how do wages work?

Answer 3

• paid for productive hours only
• usually paid weekly/fortnightly
• EFT, sometimes cash

Question 4

what does the Labour Relations Act do?

Answer 4

• sets out laws that govern labour in SA

- establishes duties and rights of employees and employers

Question 5

through which bodies will labour disputes be resolved?

Answer 5

• CCMA
• labour court / court of appeal
• SCoA
• constitutional court

Question 6

what does the Basic Conditions of Employment Act contain laws about?

Answer 6

• minimum wages
• overtime and public holiday rates
• leave, sick days

Question 7

stages of the payroll cycle?

Answer 7

1) personnel
2) timekeeping
3) preparing the payroll
4) payment preparation and payout
5) recording

Question 8

risks for personnel?

Answer 8

• unauthorized appointments / dismissals
• fictitious employees included
• unauthorized wage rates / salaries, benefits, deductions, changes
• not all changes included

Question 9

source documents used by personnel?

Answer 9

• employee register/list/masterfile
• payroll amendment forms
• employment contracts

Question 10

controls for personnel?

Answer 10

• perform background checks
• financial mgr can authorize recruitment by signing employment contract
• financial mgr can review changes to list/masterfile
• payroll administrator must update employee list/masterfile after each employment/dismissal

Question 11

functions of personnel?

Answer 11

• administrate hiring
• ensure correct pay rates are paid
• maintain VAC employee records

Question 12

types of systems in timekeeping?

Answer 12

• clock-in system for wage earners

- time allocation for salary earners

Question 13

function of timekeeping?

Answer 13

• keep VAC record of hours worked

- issue clock cards; supervising clocking process

Question 14

documents used in timekeeping?

Answer 14

• clock cards (w)
• weekly time record (s/w)
• batch control sheet / monthly summary (s)

Question 15

risks regarding wage earners? (timekeeping)

Answer 15

• employees paid for hrs not worked
• clock cards made for fictitious employees
• hrs calculated incorrectly

Question 16

risks regarding salary earners? (timekeeping)

Answer 16

• incorrect amts billed to clients
• employees claim unauthorized overtime
• employees paid incorrect bonuses

Question 17

controls for wage earners? (timekeeping)

Answer 17

• security guards to verify identity of all employees entering the premises
• employees to swipe staff card in clocking machine when clocking in and out
• factory mgr supervising the employees should perform spot checks to ensure employees are present during working hours

Question 18

controls for salary earners? (timekeeping)

Answer 18

• mgmt to review timesheets
• mgmt to approve overtime billed
• comparison of actual hrs to budgeted

Question 19

functions of preparing the payroll?

Answer 19

• creating the payroll and calculating net wages

- correctly recording normal vs overtime pay

Question 20

documents relevant for preparing the payroll?

Answer 20

• clock cards
• batch control sheet
• employee register
• deduction tables

Question 21

risks when preparing the payroll?

Answer 21

• dismissed/fictitious employees are paid
• salaries/wages calculated incorrectly
• unauth/inaccurate deductions
• employees left out due to human error

Question 22

controls for preparing the payroll?

Answer 22

• payroll clerk to authorize deductions on the payroll listing
• second payroll clerk to agree the authorized hours worked on monthly timesheet and verify hourly rate on employee list
• financial mgr to reperform wage calculation and do reconciliations; sign as evidence of check

Question 23

risks in payout for wage earners?

Answer 23

• unauth/incorrect s/w amount included in the payrun
• incorrect payslip prepared
• wrong amount of cash put in envelope
• wage paid to non-employee
• unclaimed wages stolen

Question 24

controls for payment?

Answer 24

• financial mgr to review payroll listing before pmt is made

- employee to sign register as evidence of collection when collecting their payslip

Question 25

functions for recording?

Answer 25

- record deduction liabilities from employee remuneration | - record timeously once remuneration is paid

Question 26

documents for recording?

Answer 26

- GL - wages journal - payroll

Question 27

risks when recording?

Answer 27

- s/w recorded at inaccurate amt - recording in incorrect period - not recording all expenses

Question 28

controls for recording?

Answer 28

- financial mgr to perform recon of wags and salaries expense journal and the payroll balance; follow up - duty segregation -- staff who make pmts should not also record

Question 29

examples of access controls?

Answer 29

- card access - keypad access - biometric authorization - input checks - username & password - EFT authorization

Question 30

documents used for payout

Answer 30

payroll, payslips

Question 31

functions of payout?

Answer 31

- to ensure VAC of w/s paid | - performing EFT payments