Automated Application Controls. The following provides a brief description of the computerized payroll system used by Merriman in its biweekly processing of payroll for its employees.1. Employees automatically record their attendance (hours worked) as they log in at thebeginning and end of the workday.2. At the end of each payroll period (every two weeks), employees print and authorizetheir attendance records, submitting them to their supervisor. The computer prenumbersthese attendance records and generates them in chronological order based on when theemployee submits his or her final attendance for that payroll period.3. Supervisors review the attendance records submitted by their employees and authorizethese records, which the supervisors then forward to data entry conversion operators.4. Data conversion operators input the attendance record number, employee number, andhours worked from the attendance records that have been approved by the employeesupervisors into a file to be used for computerized processing. 5. Once the entire batch of records has been accepted for processing, the computer programaccesses the payroll master file data. Gross salary is then calculated as follows:∙ Gross salary for hourly wage employees is determined by multiplying the number ofhours worked from the transaction file by the wage rate contained in that employee’smaster file record.∙ Gross salary for salaried employees is determined directly from the employee’s masterfile record.6. After the calculation of gross salary, information from the employee’s payroll masterfile data as well as federal income tax and FICA withholding tables is used to calculatedeductions from that employee’s pay.7. A payroll register is generated, distributed, and reviewed for reasonableness and obviousprocessing errors.8. Following the review of the payroll register, funds are transferred into the account designated by the employee (for those employees who have authorized electronic transfer offunds) or paychecks are prepared and held for employees (for employees who have notauthorized electronic transfer of funds).Required:For each of the preceding steps in Merriman’s payroll processing, identify appropriate controls that the company has either implemented or should implement to ensure the authorizedand accurate processing of payroll transactions.
Automated Application Controls. The following provides a brief description of the computerized payroll system used by Merriman in its biweekly processing of payroll for its employees.
1. Employees automatically record their attendance (hours worked) as they log in at the
beginning and end of the workday.
2. At the end of each payroll period (every two weeks), employees print and authorize
their attendance records, submitting them to their supervisor. The computer prenumbers
these attendance records and generates them in chronological order based on when the
employee submits his or her final attendance for that payroll period.
3. Supervisors review the attendance records submitted by their employees and authorize
these records, which the supervisors then forward to data entry conversion operators.
4. Data conversion operators input the attendance record number, employee number, and
hours worked from the attendance records that have been approved by the employee
supervisors into a file to be used for computerized processing.
5. Once the entire batch of records has been accepted for processing, the computer program
accesses the payroll master file data. Gross salary is then calculated as follows:
∙ Gross salary for hourly wage employees is determined by multiplying the number of
hours worked from the transaction file by the wage rate contained in that employee’s
master file record.
∙ Gross salary for salaried employees is determined directly from the employee’s master
file record.
6. After the calculation of gross salary, information from the employee’s payroll master
file data as well as federal income tax and FICA withholding tables is used to calculate
deductions from that employee’s pay.
7. A payroll register is generated, distributed, and reviewed for reasonableness and obvious
processing errors.
8. Following the review of the payroll register, funds are transferred into the account designated by the employee (for those employees who have authorized electronic transfer of
funds) or paychecks are prepared and held for employees (for employees who have not
authorized electronic transfer of funds).
Required:
For each of the preceding steps in Merriman’s payroll processing, identify appropriate controls that the company has either implemented or should implement to ensure the authorized
and accurate processing of payroll transactions.
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