Bài tập Bổ sung KSNB

Case 1: Trombone's payroll system

Trombone Co (Trombone) operates a chain of hotels across the country. Trombone employs in
excess of 250 permanent employees and its year end is 31 August 20X4. You are the audit
supervisorof Viola &Co and are currently reviewing the documentation of Trombone's payroll
system, detailed below, in preparation for the interim audit.

Permanent employees work a standard number of hours per week as specified in their
employment contract. However, when the hotels are busy, staff can be requested by
management to work additional shifts as overtime. This can either be paid on a monthly basis
or taken as days off.

Employees record any overtime worked and days taken off on weekly overtime sheets which
are sent to the payroll department. The standard hours per employee are automatically set up
in the system and the overtime sheets are entered by clerks into the payroll package, which
automatically calculates the gross and net pay along with relevant deductions. These
calculations are not checked at all. Wages are increased by the rate of inflation each year and
the clerks are responsible for updating the standing d a t a in the payroll system.

Employees are paid on a monthly basis by bank transfer for their contracted weekly hours and
for any overtime worked in the previous month. If employees choose to be paid for overtime,
authorisation is required by department heads of any overtime in excess of 30% of standard
hours. If employees choose instead to take days off, the payroll clerks should check back to the
'overtime worked' report; however this report is not always checked.

The 'overtime worked' report, which details any overtime recorded by employees, is run by the
payroll department weekly and emailed to department heads for authorisation. The payroll
department asks department heads to only report if there are any errors recorded. Department
heads are required to arrange for overtime sheets to be authorised by an alternative
responsible official fi they are away on annual leave; however there are instances where this
arrangement has not occurred.

The payroll package produces a list of payments per employee; this links into the bank system
to produce a list of automatic payments. The finance director reviews the total list of bank
transfers and compares this to the total amount to be paid per the payroll records; if any issues
arise then the automatic bank transfer can be manually changed by the finance director.

Required: In respect of the payroll system of Trombone Co:

You are an audit supervisor of Halley &Co and you are reviewing the documentation describing
Comet Publishing Co's purchases and payables system in preparation for the interim and final
audit for the year ending 30September 20X7.The company is aretailer of books and hasten
stores and a central warehouse, which holds the majority of the company's inventory.

Your firm has audited Comet Publishing Co for a number of years and as such, audit
documentation is available from the previous year's file, including internal control flowcharts
and detailed purchases and payables system notes. As far as you are aware, Comet Publishing
Co's system of internal control has not changed in the last year. The audit manager is keen for
the team to utilise existing systems documentation in order to ensure audit efficiency. An
extract from the existing systems notes is provided below.

Extract of purchases and payables system

Store managers are responsible for ordering books for their shop. It is not currently possible for
store managers to request books from any of the other nine stores. Customers who wish to
order books, which are not in stock at the branch visited, are told to contact the other stores
directly or visit the company website. As the inventory levels fall in a store, the store manager
raises a purchase requisition form, which is sent to the central warehouse. If there is insufficient
inventory held, a supplier requisition form is completed and sent to the purchase order clerk,
Oliver Dancer, for processing. He sends any orders above $1,000 for authorisation from
thepurchasing director.

Receipts of goods from suppliers are processed by the warehouse team, who agree the delivery
ot the purchase order, checking quantity and quality of goods and complete a sequentially
numbered goods received note (GRN). The GRNs are sent to the accounts department every
two weeks for processing.

On receipt of the purchase invoice from the supplier, an accounts clerk matches it to the GRN.
Theinvoice is then sent to the purchase ordering clerk, Oliver, who processes ti for payment.
The finance director is given the total amount of the payments list, which she authorises and
then
processes the bank payments. Due to staff shortages in the accounts department, supplier
statement reconciliations are no longer performed.

Required: In respect of the purchases and payables system for Comet Publishing Co:
(a) Identify and explain FIVE deficiencies;
(b) Recommend a control to address each of these deficiencies; and