Robatelli’s Continuing Case Solution – Chapter 10
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a. Describe how you believe an efficient and effective payroll system should be
organized at Robatelli’s.
This answer can vary depending on the type of payroll system recommends. An in–
house payroll system can have various levels of IT integration. Many companies of
Timekeeping will be a little different for different types of employees. Restaurant
employees would use the Point of sale software at the restaurant to clock in and
clock out. Thus, timekeeping at the restaurant is automated. At the commissary
and headquarters, hourly employees could use a time clock or written time cards for
timekeeping. A time clock is preferable as it increases the accuracy and internal
control of timekeeping. Supervisor approval of time worked at both the restaurants
and the commissary and office locations should occur as an internal control.
payroll software system. The payroll module within the accounting system is
preferable because it would automatically integrate with other modules such as
general ledger.
Include details such as:
a. What types of payroll documentation should be prepared at the restaurant
locations?
Ideally, there would be very little paper documentation. Each new employee
b. How will the necessary information for payroll flow between restaurants and
the home office?
At the restaurants, the POS software can record hours work as employees
clock in and clock out at the cash register. Thus, only summary information
c. How should IT systems be used in the payroll processes? IT systems should
be employed to the full extent that is possible. IT systems of payroll increase
the accuracy, efficiency, and reporting capability in payroll. As mentioned
b. How could Robatelli’s prevent the occurrence of a ghost employee at one of its
restaurant locations?
The best protection is to segregate timekeeping from check distribution. If a
manager at a restaurant had the authority to record employee time, and to distribute
c. From a cost/benefit perspective, what risks factors exist in Robatelli’s payroll
processes that make it worthwhile to implement thorough internal controls?
Generally, restaurant employees are paid weekly. This frequency is a risk factor.
Also, restaurants such as Robatelli’s tend to have high turnover in employees.
Describe the related internal control that could help detect or prevent each risk.
If Robatelli’s wished to reduce the payroll risks identified above, it could consider
outsourcing much of the payroll processing. (ADP is an example of a payroll
processing company.) Search the Web site of a payroll processing firm to
determine the benefits to Robatelli’s of outsourcing a substantial portion of its
payroll processing. Describe these benefits, the risks avoided by outsourcing,
and the risks still borne by Robatelli’s after outsourcing. Also, describe the
payroll record keeping functions that Robatelli’s must still maintain even if it
outsources a substantial portion of its payroll processing.
If we assume that Robatelli’s outsources payroll, but not HR, then Robatelli’s
assumes the risks inherent in hiring employees. For example, an employee who
has a criminal background can cause very large legal risks for a company, and
can also be a risk for fraud or a risk to other employees.
The benefits to outsourcing are that the time, costs, and risks of payroll are
reduced. ADP’s website lists the following benefits of outsourcing payroll:
Outsourcing your payroll can provide your small business with a number of important
benefits:
Save time
Using an outsourced payroll solution is typically more efficient for a small business than
processing payroll internally. Leaving payroll to experts frees up hours that you can
devote to other important parts of your business. Whether it is your time, staff time, or a
Save money
Many business owners underestimate the cost of processing payroll internally by failing
to account for all hours spent and resources allocated to pay employees and maintain
payroll paperwork. A thorough cost assessment usually proves that a small business saves
money by outsourcing the processing, tracking and filing of payroll documents. To assess
your own internal payroll costs, consider:
Avoid penalties
Calculating federal, state, and local employment taxes and filing payroll-related tax
paperwork can be more than just a hassle. If it’s done incorrectly, your small business
may face penalties and even interest on money owed since the mistake was made. In fact,
it is estimated that one in three small businesses receive a tax penalty costing over $800
each year. Outsourcing payroll does away with the risk of many of these costs and hassles
because:
• An outsourced payroll provider calculates payroll taxes, based on its expertise and
close tracking of regulation changes
d. Describe how you believe an efficient and effective system of fixed assets
accounting should be organized at Robatelli’s.
Robatelli’s should ensure they have proper procedures to authorize the purchase
and retirement of fixed assets. This would include policies that require a cost benefit
adequate funding in the capital budget.
The ordering, receiving, and record keeping of fixed assets should be segregated so
as to reduce the chance of fraud and to reduce errors in fixed asset purchasing or
record keeping. The purchase of a fixed asset should follow typical purchase
procedures that include a requisition, purchase order, receiving and inspection.
Be sure to include the following issues in your response:
a. How should the fixed assets accounting department maintain control over
fixed assets in the various restaurant locations? The best control over fixed
assets at the restaurants is supervision. Each restaurant manager must be
responsible for the supervision of fixed assets at his/her restaurant. Any
change in fixed assets such as break down or theft should be reported to the
home office so that records can be changed and appropriate steps taken to
repair or replace the asset.
b. How should IT systems be used in the fixed assets process?
IT systems should be used to the full extent possible. The number of fixed