Problem
Wendell Unity Products Company The following scenario below is about Payroll Cycle (Hire to Retire Process). You are assessing internal control deficiencies and how you can recommend proposals in the payroll and personnel cycle for Wendell Unity Products Company, a manufacturing company specializing in assembling kitchenware parts. Wendell employs approximately two hundred seventy-seven salaried employees in three locations, Teresa Branch, Pureza Branch, and El Pueblo Branch. Each location has one foreman who is responsible for overseeing operations. The owner of the company lives in Rockwell, Makati, and is not actively involved in the business. The two key executives are Leni, the vice president of sales, and Rachel, the controller, and both have been employed by the company for more than twenty years. New hourly employees are hired by the foremen at each location on an as-needed basis. Each foreman recommends the wage rate for each new employee as well as wage rate increases. The effectiveness of employees varies considerably, and their wages are adjusted accordingly. All wage rates are approved by the controller. Since each hourly employee works independently, Wendell has a highly flexible work schedule policy, as long as they start after 7:00 a.m. and are finished by 6:00 p.m. Each foreman has a supply of prenumbered time cards that they distribute to employees on Monday morning. Because some employees do not start until later in the day several time cards are kept in a box by the time clock for their use. Hourly employees use time clocks to record when they start and stop working. Each Friday, after the employees complete their work for the week, the foremen account for the time cards they distributed, approve them, and send them by an overnight courier to the main office in Sta. Mesa. Ms. Gorgeous, the payroll clerk receives the time cards on Saturday and enters the information using payroll software that prepares the checks or direct deposit authorizations and the related payroll records.
The checks are ready for the controller to sign Monday morning. She compares each check to the payroll transactions list sent by the payroll department and returns the checks using the same courier to each location. The foremen pick up the checks and distribute each check to the appropriate employee. If an employee is not present at the end of the day the foreman mails it to the employee's address. Except for the foremen, all salaried employees work in the Sta. Mesa office which their building is being leased to Berhel, the Artist. The vice president of sales or controller hires all salaried employees, depending on their responsibilities, and determines their salaries and salary adjustments. The owner determines the salary of the vice president of sales and controller. The payroll clerk also processes the payroll transactions for salaried employees using the same payroll software that is used for hourly employees, but all salaried employees use direct deposit, so no check is prepared. The payroll software has access controls that are set by the controller. She is the only person who has access to the salary and wage rate module of the software. She updates the software for new wage rates and salaries and changes of existing ones. The controller's assistant has access to all other payroll modules. Linda, the controller's assistant, has been taught to reconcile bank accounts and does the reconciliation monthly.
Task
Prepare list with a description of the following: State each in bullet form with explanations
a) Identified control weaknesses/deficiencies/red flags.
b) Proposed recommendations in relation to items number 1.