Based on the narrative given, identify SIX (6) weaknesses from the above payroll processes. For each identified weakness, recommend a change that can improve the internal control.
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
Armando Agency is a modeling agency that represents fashion models, to work for the fashion industry. This agency earns their income via commission, usually from the deal they make with the model and/or the head agency. This agency employs 50 employees consisting models, photographers, trainers, and clerks in one big studio. The director, manager and account executive are place at the main office.
All employees record their attendance every morning using the punch card machine in the studio. At the end of the month, Mr. Alexander, the manager, gathers timecards from the studio clerk and sends them for payroll calculation to the account executive. Ms. Ramona, the account executive, examines the attendance information of the staff in the timecards against the employees’ master file. Ms. Ramona calculates the individual’s salary manually, including gross pay, commissions, and deductions. After that, she prepares individual’s payslip, payroll payment voucher and payroll registers for the month. These documents are used to prepare payroll disbursement.
There are two payroll disbursement methods: by cash or by cheque. Full-time models, for example, are paid by cheque, while part-time models are paid in cash. The account executive handles cash payments or paychecks in an individual envelope based on the payroll payment vouchers. The envelopes will be included along with the payslip, payroll payment voucher of the employees and she places them on the manager's desk. Then, the manager, Mr. Alexander signs the paychecks and forward them to the studio clerk for distribution to the employees.
(i)
Based on the narrative given, identify SIX (6) weaknesses from the above payroll processes. For each identified weakness, recommend a change that can improve the internal control.
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