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Payroll Cycle - Coggle Diagram
Payroll Cycle
Internal Controls and Controls Objectives
Management control
Rotation of duties
Supervision and review
Segregation of duties
Personnel take leave regularly
Internal audit
Occurence / Validity
Authorisation
Classification
Accuracy
Recording
Cut-off
Documents in the cycle
Permenant employee file
Pre numbered employee change forms
Clock cards/ ID smart cards
Job time ticket/ Job card
Payslips
Pay packets
Tax Certificates
Unclaimed wage register
Deductions returns
Main functions of the cycle
The Human Resource function
- finding, recruiting, screening and training job applicants.
Timekeeping function
- accurate and timely recording of time and attendence.
Payroll Preparation function
- administration of employee pay based on employee type, status, salary, wages an deductions.
Payment Preparation and Payout function
- ensure that employees are paid their wages for only the hours that they have worked.
Deductions: Payments & Recording function
- the responsibility of the compant to hold back certain portions of the wages earned due to statutory requirements
Overview
Recording of time worked by employees
Processing of weekly/ monthly payrolls
Allocation of payroll expenses
Payment to employees/ deductions
Example of weakness/ risk
Sceanrio -An organisation does wage pay-outs every Friday of the week. When the pay-outs are done, the employees look for their pay packets that are discplayed on a table. Once they have identified their packet they will take it, and immediately leave the pay-out venue.
Weakness - There is no identification of the employees before they select their pay-packets. The foreman does not identify the employees, and they do not use their identification documents to verify their identity. The employees also do not sign a register as proof that they have received their wages.
Risk - Employees can take another person’s wages. The employees do not sign as proof that they collected their wages. They could deny receiving payment.
Substantive Testing
Validity/ Occurence
Occurence