Chapter 12 - Chapter 12 - Auditing the Human Resource...

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Chapter 12 - Auditing the Human Resource Management Process 12-1 CHAPTER 12 AUDITING THE HUMAN RESOURCE MANAGEMENT PROCESS Answers to Multiple-Choice Questions 12-14 b 12-19 c 12-15 c 12-20 b 12-16 a 12-21 c 12-17 b 12-22 b 12-18 c 12-23 c Solutions to Problems 12-24 To best prevent errors and fraud, one person should be assigned to each of the following functions: human resources, supervision, timekeeping, payroll processing, disbursement, and the general ledger. However, fewer could be hired, as long as certain segregations are in place. The supervision function should be separated from the human resources and payroll-processing function; the disbursement function should be separate from human resources, supervision, and payroll-processing; and the payroll-processing function should be separate from the general ledger function. These separations would help prevent fictitious employees from appearing on the payroll, unauthorized payments from being made, and alteration of the accounting records from happening. 12-25 a. Weaknesses in the internal control system are the following: Lack of approval of the foreman's clock card by an appropriate supervisor is an unsound practice. Employees should not be permitted to maintain their own time records and submit them without approval. The computation of regular and overtime hours prepared by payroll clerk no. 2 that is used in the preparation of the payroll register is not compared with the summary of regular and overtime hours prepared by the foreman. Arithmetic computations and rates of pay used in the preparation of the payroll register are not checked by a person who is independent of their preparation, and payroll register columns are not verified (re-added) by a person other than the preparer of the payroll register. Payroll checks are not reconciled to the payroll register in order to prevent improper disbursements. A signature-stamp machine should not be in the custody of any payroll clerk who has access to unsigned checks. An officer of the company does not approve payroll. Since the paymaster should be independent of the payroll process, signed payroll checks should not be distributed by the foreman.
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Chapter 12 - Auditing the Human Resource Management Process 12-2 Unclaimed payroll checks should be in the custody of an employee who is independent of the payroll process. The comparison of regular and overtime hours indicated on payroll checks with regular and overtime hours indicated on clock cards should not be performed by the clerk who is responsible for the original computation of regular and overtime hours indicated on clock cards. The clerk who is responsible for preparing the payroll register should not
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This note was uploaded on 10/16/2011 for the course AIM 6334 taught by Professor Chrits during the Spring '11 term at University of Texas at Austin.

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Chapter 12 - Chapter 12 - Auditing the Human Resource...

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