Week 2 Assignment from Text – Jamie Oswalt
16-33
a.
The payroll procedures at the Galena plant do contain some shortcomings. The first one is that the supervisors in the production department are not approving actual hours. Another one found is that payroll clerk seems to be in charge of most duties, which clearly signifies a lack of segregation of duties. Finally, the employee from the personnel department should not be the one to have access to the payroll checks and hold them until time for delivery.
In order to fix these shortcomings and improve the internal controls of Galena’s payroll procedures, there are certain changes that should be made. All employees should sign off on their own time cards and then give the time card to his or her immediate supervisor for approval. There should also be at least two payroll clerks with different duties. One should prepare the information that will need to be processed through the payroll data processing. Another should be the one to reconcile the time cards and the payroll register. The payroll clerk should not be authorized to void and reissue checks. This should be approved at the management level. The payroll checks should be given to the accounting department for safe keeping instead of the personnel department.
b.
All of the shortcomings mentioned above could lead to material errors and irregularities. The lack of the segregation of duties is a material weakness. The payroll clerk could easily submit false or fictitious input data and could hide the irregularities by making unapproved changes to the reconciliations of the payroll register. Also, the procedure for voiding computer-generated checks and issuing manual replacement checks could result in major irregularities that might not be noticed by others within their spectrum of duties.

16-35 Question on Internal Controls Questionnaire |