Reference no: EM133014936
Question - Toni Burke is the manager of a group of coffee bars, Victoria's Better Butter Coffee Inc. (VBBC). Toni has come to Avenue LLP, a public accounting firm, to discuss the operations of VBBC. Specifically, she explains that VBBC just purchased a new automated payroll system and as a result, payroll has increased significantly in the last year. "We purchased this new system, as I am travelling between stores, and I found it difficult to track all my employees manually." Toni has asked Avenue LLP to identify any control weaknesses within the payroll process and provide recommendations to improve them. Toni has provided a description of the payroll process:
"Our accounting department consists of four people: the owner of VBBC, myself and two accountants reporting to me. The owner primary works in the background, approving purchases and payments. When an employee joins VBBC, one of the accountants enters their details in the employee database. Any changes, such as a new bank account or pay raise, get entered in the same way. No one reviews the changes.
When an employee leaves VBBC, employee records remain active after employees are terminated. I previously reviewed the list of employees active in the employee records once per year because prior to this purchase, we did our timesheets and paycheques by hand, so I knew who got paid every week."
"Each employee has a login, which they enter at the cash register when they start their shift. They must log out when they end their shift. At the end of the day, the cash register creates a timesheet for each employee and automatically sends the timesheets to our payroll system, and every week, the system generates a final timesheet for the week for the hours worked by each employee."
"These weekly timesheets then go directly to either of the accountants, who reviews and adjusts the time if necessary. The timesheets are then sent to our new payroll provider and the employees are paid."
Required -
a) Identify two control weaknesses in the payroll process, addressing the implication each weakness has on VBBC.
b) Provide two recommendations to address each control weakness identified in part a.