Part A. Payroll System
Mr David and Mr Peter started a manufacturing business, “D&P Company (P&D)”. Despite the fact that the manufacturing industry has undergone significant disruption and transformation during the recent pandemic, the demand for the products of P&d has increased significantly since 2020. They recruited more than two hundred employees in response to this higher demand. To expedite this process, they did not perform any background check. It might be relevant to note that much of the manufacturing work involves casual labour employed in the production department. The work is hard,and employees often move on after a few months.
Although the company does not issue audited financial statements, its owners have contacted your Accountancy Firm to conduct a review of its internal controls.2 The focus of your review at this time is the payroll process. The employees of the D&P Company use a time clock in an unsupervised area to record their time on the job. The time-keeping clerk monitors the process but is often distracted by other duties. Every Friday, the shop foremen collect the time cards for their subordinates, review and approve them, and deliver them to the payroll clerk.
The payroll clerk uses a stand-alone PC to record the employee wages in the employee records and print a hardcopy of payroll register. It might be essential to note that the accounting department received one copy of the payroll register from the payroll clerk. The clerk then files the time cards and a copy of the payroll register in the payroll department. The accounting department clerk receives the payroll register, reviews it for accuracy, and uses the department computer to record the transaction by posting to subsidiary and general ledger accounts, including wages expense, cash, and various withholding accounts. The clerk then prints the checks, which are written on the general cash account.The clerk signs the paychecks and sends them to the foremen, who distribute them to the employees.Finally, the clerk files the payroll register in the department.
1. Specify the potential internal control weakness in relation to the recruitment process.
2. Further, analyse the internal control weaknesses in the system. Model your response according to our discussion in the interactive tutorials. Further, describe the controls that should be in place in this system. You may include the discussion on the need of an imprest account.
Part B. System Analysis and Selection Report. [Up to 2000 words]
Note: Part B is an independent part. Please do not relate it to Part A.
You are running an Accounting Information System consultancy firm. One of your clients is currently evaluating its information systems. The managing director of your client thinks that they need to invest in an Enterprise Resources Planning (ERP) system to support the growth of the business. During your first meeting, the managing director of your client requested you to evaluate their business and recommend ERP software.
You must select a listed company of your choice (your firm’s client).3 The company chosen should be a manufacturing firm listed on either The Australian Stock Exchange or the Stock Exchange of your home country. The selected company is your firm’s client.
The framework of Analysis [Requirements]
The report should include the following components:
1. Background of the Selected Business
1.1 Evaluate your client’s business process to identify potential weak internal controls and the risk associated with these potential weak controls. And recommend the control techniques that will reduce or eliminate the potential risks. [Hint: your response should be based on our discussion in interactive tutorials 4 to 6.]
2. Systems Requirements
2.1 Briefly discuss the software features and functionalities your client should consider supporting its business activities. [Hint: your response should be based on Section 1.1 above.]
3. Software Selection
3.1 Compare and contrast the features and functionalities of three ERP software packages offered by the ERP vendors. [Hint. Try to apply the general functionalities and critical elements of ERP systems we discussed in the week ten interactive tutorial].
3.2 In the end, identify the most suitable vendor and ERP software package for your client and explain why it is the best option.