CHAPTER 6
THE EXPENDITURE CYCLE PART II:
PAYROLL PROCESSING AND
FIXED ASSETS PROCEDURES
Chapter 6 page 227
REVIEW QUESTIONS
1. Job tickets capture the time spent on each job during the day and are used to allocate the labor charges to the WIP account.
2. The personnel department, through the personnel action form authorizes changes to employee pay rates.
3. A form of payroll fraud involves a supervisor submitting fraudulent time cards for nonexistent employees. The resulting paychecks, when given to the supervisor are then cashed by the supervisor. This type of fraud can be reduced or eliminated by using a paymaster to distribute paychecks to employees in person. Any uncollected paychecks are then returned to payroll.
4. A separate imprest account is established for the exact amount of the payroll based on the payroll summary. When the paychecks are cashed, this account should clear leaving a zero balance. Any errors in checks (additional checks or abnormal amounts) would result in a non-zero balance in the imprest account and/or some paycheck would not clear. This will alert management to the problem so corrective action can be taken.
5. A form of payroll fraud involves employees clocking the time cards of absent employees. By supervising the clocking in and out process, this fraud can be reduced or eliminated.
6. The personnel action form is a list of personnel changes that enables the payroll department to prepare a list of currently active employees. Any submission of time cards by supervisors for fictitious or ex-employees should thus be detected.
