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Unit 5 - Coggle Diagram
Unit 5
Control Objectives, Internal Controls, and Test of Controls
Completeness
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Tight controls over clocking in, payroll preparation, and wage payment.
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Testing through surprise attendance at wage pay-out, observation of payment collection and signing, and inquiry regarding segregation of duties and loan procedures.
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Accuracy
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Testing through inspection of payroll runs, comparison with paid cheques, and follow-up on discrepancies.
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Recording
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Testing through inspection of recorded hours, wage rates, and calculations, as well as payroll review evidence.
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Human Resources Function
Journal Entries
Monthly journal entry: Debit salaries and wages, credit bank (payables).
Deductions: Liability initially raised, then reversed upon payment.
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Accounts Affected
Statement of Comprehensive Income: Includes gross salaries, wages, commissions, bonuses, manufacturing wages, directors' emoluments, and employer contributions.
Statement of Financial Position: Involves employees for accrued remuneration, accounts payable for payroll deductions (e.g., medical aid, taxes, pension funds), accounts payable for employer contributions, and various bank accounts.
Controls
Decision-making on pay rate changes and promotions by HR department after consultation and consideration of relevant laws and regulations.
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Maintenance of all relevant documents in each employee file, including application forms, personal details, letters of appointment, employment contracts, and payroll amendment forms.
Interviews with all applicants, with the department head present.
Objective
The HR function manages personnel matters, including recruitment, counseling, negotiations, and adherence to labor laws. It maintains employee records, handles hiring and dismissals, and ensures timely implementation of pay rate changes.
Timekeeping Function
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Documentation: Clock cards, batch control sheet, batch register.
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Controls: Sequence check for clock cards, limited access points, supervision over clocking, foreman's approval of hours worked, authorization for overtime.
Purpose: Record valid hours worked by employees, especially wage earners.
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