Th futory foreman interviews applicants and on the

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Th. fu.tory foreman interviews applicants and on the basis of the interview either hires or rejects them. When applicants are hired, they prepare a W-4 form (Employee's 584 Part2 / THE PROCESS OF AUDITINC
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Withholding Exemption Certificate) and give it to the foreman. The foreman writes the hourly rate of pay for the new employee in the corner of the W-4 form and then gives the form to a payroll clerk as notice that the worker has been employed. The foreman"verbally advises the papoll department of rate adjustments. A supply of blank time cards is kept in a box near the time clock at the entrance to the factory. Each worker takes a time card on Monday morning, fills in his or her name, and punches the time clock upon their daily arrival and departure. At the end of the week, the workers drop the time cards in a box near the door to the factory. On Monday morning, the completed time cards are taken from the box by a payroll clerk- One of the payroll clerks then enters the payroll transactions into the computer, which records all information for the payroll journal that was calculated by the clerk and automatically updates the employees' earnings records and general ledger. Employees are automatically removed from the pa1toll when they fail to turn in a time card. The payroll checks that are not directly deposited into employees' bank accounts are manually signed by the chief accountant and given to the foreman. The foreman distributes the checks to the workers in the factory and arranges for the delivery of the checks to the workers who are absent. The payroll bank account is reconciled by the chief accountant, who also prepares the various quarterly and annual payroll tax repofis. a. List the most important deficiency in internal control and state the misstatements Required that are likely to iesult from the deficiency. b. For each deficiency that increases the likelihood of fraud, identiff whether the likely fraud is misappropriation of assets or fraudulent financial reportlng.* 11-30 (Objectives 11-2,11-3,11-4,11-6) Fateen Shakran, store supervisor, is responsible for creating a summary of the store's transactions at the end of each day. He is also responsible for checking the register tape against the credit slips and cash in the register, and then depositing the money in the morning. Fateen recently took on u ,l"* ,il" u, head bookkeeper, when the former one retired. Fateen would occasionally change a transaction on the register and pocket the extra money. Now, he waits until the end of the year for the store manager to go on holiday break. He writes a check for himself in the amount of an invoice, then cancels the check originally written to pay for the invoice. He cashes the check for himself, and waits a few weeks before resubmitting the invoice.
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