Problem
Workers at Produce Central enter and leave the work sites using their Employee ID swipe cards. The work hours are automatically uploaded to the payroll system. Every fortnight, the payroll clerks compile work hours from the system, and calculate total pay and deductions. Total fortnightly hours are sent to supervisors for approval. Often supervisors approve this if the total hours for each employee does not exceed 50 hours per week.
Budgeted pay is prepared to HR clerk based on previous month's pay, plus 10% for fluctuations in production conditions. Supervisor prepares daily work schedules and adjusts them in accordance with weather and project progress. Due to the changing nature of these schedules, they are not shared with HR. Significant variations between budgeted pay and actual pay are reported as a result.
In the last quarter, an audit has found significant variations between budgeted pay and actual pay, although the total work hours are as budgeted. Further investigation suggests some workers have consistently arrived late and signed out after 7pm, triggering overtime payments. The ordinary hours of work are from 7am to 7pm.
Casual workers are often employed as required by supervisors. A HR clerk attends these recruitment interviews and if successful, the clerks sends the new recruit a new employee form. The filled and signed form is then used to set up a new employee in the HR and payroll system. Sometimes when the HR clerk is busy or sick, the supervisor interviews and recruits the new employee, and sends the filled and signed new employee form to HR.
Performance meetings are performed half yearly between the supervisor and employees. After the meeting, the supervisor records any adjustments to pay or work hours on the performance meeting form and forwarded to HR for processing. When receiving the next pay slip, some employees later complained that the adjustments to pay are lower or different from what was discussed in the meetings or some adjustments are not timely recorded, resulting in underpayments.
A regular patch to the payroll system has resulted in a glitch in which all employees are given supervisor access and hence they can view the hours, pay rates and total pay and deductions of other employees in their team/department.
Task
For each scenario, in the table below:
1. Identify five risks present in the previously listed activities.
2. Recommend two controls for each of the risks you identified. Explain why the control(s) help mitigate the risks.
3. Classify and briefly explain each of the control activities as preventive, detective, or corrective.