Professional Documents
Culture Documents
Solution 15.5
Solution 15.5
15.5
Arlington Industries manufactures and sells engine parts for large industrial
equipment. The company employs over 1,000 workers for three shifts, and most
employees work overtime when necessary. Figure 15-10 depicts the procedures
followed to process payroll. Additional information about payroll procedures
follows:
The HRM department determines the wage rates of all employees. The process
begins when a form authorizing the addition of a new employee to the payroll
master file is sent to the payroll coordinator for review and approval. Once the
information about the new employee is entered in the system, the computer
automatically calculates the overtime and shift differential rates for that
employee.
A local accounting firm provides Arlington with monthly payroll tax updates,
which are used to modify the tax rates.
Employees record time worked on time cards. Every Monday morning the
previous weeks time cards are collected from a bin next to the time clock, and
new time cards are left for employees to use. The payroll department manager
reviews the time cards to ensure that hours are correctly totaled; the system
automatically determines if overtime has been worked or a shift differential is
required.
The payroll department manager performs all the other activities depicted in
Figure 15-10
The payroll master file is backed up weekly, after payroll processing is finished.
(CMA Examination, adapted)
The payroll checks are not prenumbered nor are they properly stored. As a result,
there is no audit trail to verify check usage.
A backup of the master file is made after each weekly processing of the payroll.
A local accounting firm provides Arlington Industries with updates on tax rates.
15-2
2009 Pearson Education, Inc. Publishing as Prentice Hall