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1. PROBLEMS
1. PAYROLL FRAUD
a. An employee action report from the personnel department should list
b. An independent paymaster should distribute the paychecks to the
2. PAYROLL CONTROLS
a. The payroll department has no independent information as to
changes in an employee’s status. For example, the foreman may
b. 1. An employee action report from the personnel department should
list all current employees. Time cards for terminated or non-existent
2. An independent paymaster should distribute the paychecks to the
Chapter 1 Page 2
3. PAYROLL CONTROLS
Risks:
Controls:
4. FLOWCHART ANALYSIS
Control problems: Payroll checks appear to be drawn on the general cash
account.
Chapter 1 Page 4
5. SEPARATION OF DUTIES
Part 1) and 2). The tasks to be performed by Personnel and Payroll employees
and that data they may or may not access include:
Personnel Empolyees:
Payroll Employees:
Part 3) The central storage of sensitive data requires multilevel security that
6. PAYROLL FLOWCHART ANALYSIS
Chapter 1 Page 5
Risks:
7. COMPREHENSIVE FLOWCHART ANALYSIS
Transaction authorization
Segregation of duties
Accounting records
8. FIXED ASSET SYSTEM
Chapter 1 Page 6
Risks:
Controls:
9. FIXED ASSET SYSTEM
Risks:
Controls:
Chapter 1 Page 7
10. FIXED ASSET FLOWCHART ANALYSIS
Risks:
Controls:
11. PAYROLL PROCEDURES ALBRIGHT MFG
Part B. Internal Control Weaknesses
Accounting Records
Part C, Recommendations
Chapter 1 Page 9
Chapter 1 Page 10
