QUESTION 2 NAK Consult Ltd is a construction company with many contracts being executed concurrently. A large number of workers are on various construction sites. NAK Consult Ltd has an internal audit department and the team is currently reviewing cash wages systems within the company. The following information is available concerning the wages systems: • Workers on each site are controlled by a foreman. The foreman has a record of all employee numbers and can issue temporary numbers for new employees. • Any overtime is calculated by the computerized wages system and added to the standard pay. • The two staff in the wages department make amendments to the computerized wages system in respect of employee leave, illness, as well as setting up and maintaining all employee records. • The computerized wages system calculates deductions from gross pay, such as employee taxes (PAYE), and other statutory deductions. • Finally, a list of net cash payments for each employee is produced. Cash is delivered to the wages office by secure courier. The two staff place cash into wages envelopes for each employee along with a handwritten note of gross pay, deductions and net pay. The envelopes are given to the foreman for distribution to the individual employees. Required: Identify and explain FIVE deficiencies in NAK Consult Ltd system of internal control over the wages system that could lead to misstatements in the financial statements, and, for each deficiency, suggest an internal control to overcome that deficiency. 3 Note: Prepare your answer using two columns headed Control deficiency and Internal Control recommendation respectively.
QUESTION 2 NAK Consult Ltd is a construction company with many contracts being executed concurrently. A large number of workers are on various construction sites. NAK Consult Ltd has an internal audit department and the team is currently reviewing cash wages systems within the company. The following information is available concerning the wages systems: • Workers on each site are controlled by a foreman. The foreman has a record of all employee numbers and can issue temporary numbers for new employees. • Any overtime is calculated by the computerized wages system and added to the standard pay. • The two staff in the wages department make amendments to the computerized wages system in respect of employee leave, illness, as well as setting up and maintaining all employee records. • The computerized wages system calculates deductions from gross pay, such as employee taxes (PAYE), and other statutory deductions. • Finally, a list of net cash payments for each employee is produced. Cash is delivered to the wages office by secure courier. The two staff place cash into wages envelopes for each employee along with a handwritten note of gross pay, deductions and net pay. The envelopes are given to the foreman for distribution to the individual employees. Required: Identify and explain FIVE deficiencies in NAK Consult Ltd system of internal control over the wages system that could lead to misstatements in the financial statements, and, for each deficiency, suggest an internal control to overcome that deficiency. 3 Note: Prepare your answer using two columns headed Control deficiency and Internal Control recommendation respectively.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
Transcribed Image Text:QUESTION 2
NAK Consult Ltd is a construction company with many contracts being executed concurrently. A large
number of workers are on various construction sites. NAK Consult Ltd has an internal audit department
and the team is currently reviewing cash wages systems within the company. The following information is
available concerning the wages systems:
• Workers on each site are controlled by a foreman. The foreman has a record of all employee numbers and
can issue temporary numbers for new employees.
• Any overtime is calculated by the computerized wages system and added to the standard pay.
• The two staff in the wages department make amendments to the computerized wages system in respect of
employee leave, illness, as well as setting up and maintaining all employee records.
• The computerized wages system calculates deductions from gross pay, such as employee taxes (PAYE),
and other statutory deductions.
• Finally, a list of net cash payments for each employee is produced. Cash is delivered to the wages office
by secure courier. The two staff place cash into wages envelopes for each employee along with a handwritten
note of gross pay, deductions and net pay. The envelopes are given to the foreman for distribution to the
individual employees.
Required:
Identify and explain FIVE deficiencies in NAK Consult Ltd system of internal control over the wages
system that could lead to misstatements in the financial statements, and, for each deficiency, suggest an
internal control to overcome that deficiency.
3
Note: Prepare your answer using two columns headed Control deficiency and Internal Control
recommendation respectively.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.