Chapter 6: Case Study
PP&E Sports Emporium

Weaknesses:
1. The clock machine is in an unsupervised area.

2. Tammy, the timekeeping clerk, tries to keep track of the employees, but is often distracted by many other things. Every Friday, Tammy submits the time cards to Pamela, the payroll check

3. Some supervisors have been submitting time cards for employees that no longer work for the company.

4. Alex, an accounts payable clerk, authorizes the cash disbursement department to proceed with posting.

5. Alex updates the cash disbursement journal.

6. The treasurer signs all the paychecks and gives it to the supervisor for distribution.

7. Gary, the general ledger clerk, is having a difficulty on reconciling the summaries that he has received.

Recommendation:
1. Clock Machine area should be supervised by an authorized person, because sometimes employees will “clock in” for another worker who is late or absent.

2. Replace Tammy. It is very important to keep track on employee’s daily attendance and verify its accuracy and sign them before sending it to payroll. If the clerk is not capable enough of doing it, might as well pass it on to a more responsible employee.

3. Before sending the time cards to the payroll, it is very important to verify first. That is why a timekeeping clerk must be responsible to handle all work.

4. The accounts payable clerk is not authorized to authorize any cash disbursement. The authorization must come from the manager of cash disbursement department. The work of the clerk must not have the power to authorize any cash disbursement.

5. There must be a separate department when recording any disbursements.

6. It would be better to have a payroll imprest account because the company has to prepare and sign 100 checks rather than deposited it to the bank.

7. There should be proper delegation and separation of tasks. Correct information and needed files should also be submitted to the general ledger department for reconciliation of summaries. Correct verification and authorization should also be implemented.