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control over transactions(1) (office organisations (purchasing: make…
control over transactions(1)
office organisations
purchasing: make necessary purchases and reach the best purchasing mix
sales and marketing: taking sales orders, advertising effectively
finance: proper management of finance and financial management
general administration: secretarial support; telephone queries; rent or properties
HR: hiring, firing, training staff and providing welfare for staff
control over transactions:
sales on credit made to new customers/purchases of goods or non-current assets and payments for expenses/payroll
financial control procedures
purposes of financial control procedures: financial transactions are properly carried out/the assets are safeguarded/accurate and management information is produced
examples of procedures
cheques over a certain amount to need two signatories/authorization limits for purchase orders/effective credit control procedures
authorization for petty cash and expenses claims/computer security procedures and access levels
signals of poor control procedures
cash or cheques mised/excessive bad or doubtful debets/unauthorized pruchases
customers not paying or suppliers not being paid on time/failure to produce accounts at the specified time
the payroll system
key controls over payroll cover: documentation and authorization of staff changes/calculation of wages and salaries/payment of wages and salaries/authorization of deductions
inputs:weekly-paid payroll/clock cards/time sheets and bonus
processing in a payroll system: calculating and implementing the various deductions to find net pay, and the making payments by the appropriate method
outputs: payslips,payroll analysis, a floppy disk with payment details
aims and measures
recording of wages and slaries
gross and net pay and deductions are accurately recorded on the payroll/wages and salaries paid are recorded correctly in the bank and cash records/wages and salaries are correctly recorded in the general ledger
bases for compilation of payroll/preparation, checking and approval of payroll/dealing with non-routine matters
payment of wages and salaries
the correct employees are paid
segregation of duties of cash sheet preparation, filling of pay packets and distribution of wages/authorization of wage cheque/custody of cash/verification of identity/recording of distribution
setting of wages and salaries
employees are only paid for what they have done/gross pay has been calculated correctly and authorized
segregation of duties/recording of changes in personnel and pay rates/review of hours worked
authorization required: engagement and discharge of employees/changes in pay rate/overtime/non-statutory deductions(like pension contributions) /advances of pay
deductions
statutory and non-statutory deductions have been calculated correctly and are authorized/the correct amounts are paid to the taxation authorities
preparation and signing of cheques and bank transfer lists/comparison of cheques and back transfer list with payroll/maintenance and reconciliation of wages and salaries bank account