HA2042
Accounting Information Systems (T1, 2012)

The
assignment has two parts namely Part 1 (10 marks) & 2 (10 marks). Part 1 will require you

to
evaluate the payroll system for the Skip-Rope Manufacturing Company. Part 2 will involve a

company
called Kowal Manufacturing Company in which you are required to identify the

weaknesses
in their current system among others. The two (2) cases are selected form you

textbook,
Accounting Information Systems 12th edition by M.B. Romney and P.J. Steinbart.

The
assignment aims to develop the student’s understanding of an information system
in the area

of
Human Resources Management and Payroll Cycle. The task also aims for the
student to be

able
to analyse a case and identify the threats and weaknesses and give
corresponding

recommendations. it is well encouraged to include any
additional

information
that students may think will be useful in conducting financial statements
analysis of

the
selected company.

.General Rules and
Requirements:

Reports must be confined
to

2,000
words (+/- 5%). As a minimum, a title page, table of contents page (based on
your report

headings),
introduction, conclusion and references should be included. Font type should be
Arial

(size
11), paragraph spacing should be 1.5.

Note:
Any additional material from external sources that you “copy and paste” into
your report is

NOT
included in the word limit. Also, ensure it is appropriately referenced.

Part 1

Chapter
15

Skip-Rope
manufacturing (page 475)

15.3You have been hired to
evaluate the payroll system for the Skip-Rope Manufacturing Company. The
company processes its payroll in-house. Use Table 15-1 as a reference to
prepare a list of questions to evaluate Skip-Rope’s internal control structure
as it pertains to payroll processing for its factory employees. Each question
should be phrased so that it can be answered with either a yes or a no; all no
answers should indicate potential internal control weaknesses. Include a third
column listing the potential problem that could arise if that particular control
were not in place.

Part 2

Chapter
15

Kowal
Manufacturing Company (page 475)

15.4 Although most medium and large companies have implemented
sophisticated payroll and HRM systems like the one described in this chapter,
many smaller companies still maintain separate payroll and HRM systems that
employ many manual procedures. Typical of such small companies is the Kowal
Manufacturing Company, which employs about 50 production workers and has the
following payroll procedures:

·The factory supervisor interviews and hires all job
applicants. The new employee prepares a W-4 form (Employee’s Withholding
Exemption Certificate) and gives it to the supervisor. The supervisor writes
the hourly rate of pay for the new employee in the corner of the W-4 form and
then gives the form to the payroll clerk as notice that a new worker has been
hired. The supervisor verbally advises the payroll department of any subsequent
pay raises.

·A supply of blank time cards is kept in a box near the
entrance to the factory. All workers take a time card on Monday morning and
fill in their names. During the week they record the time they arrive and leave
work by punching their time cards in the time clock located near the main
entrance to the factory. At the end of the week the workers drop the time cards
in a box near the exit. A payroll clerk retrieves the completed time cards from
the box on Monday morning. Employees are automatically removed from the payroll
master file when they fail to turn in a time card.

·The payroll checks are manually signed by the chief accountant
and then given to the factory supervisor, who distributes them to the
employees. The factory supervisor arranges for delivery of the paychecks to any
employee who is absent on payday.

·The payroll bank account is reconciled by the chief
accountant, who also prepares the various quarterly and annual tax reports.

a. Identify weaknesses
in current procedures, and explain the threats that they may allow to occur.

b. Suggest
ways to improve the Kowal Manufacturing Company’s internal controls over hiring
and payroll processing. (CPA Examination, adapted)