The payroll procedures used by three different companies are described below.
1. In Ecom Motel each employee is required to mark on a clock card the hours worked. At the end of each pay period, the employee must have this clock card approved by the department manager. The approved card is then given to the payroll department by the employee. Subsequently, the accounting department pays the employee by check.
2. In Yerkes Casino clock cards and time clocks are used. At the end of each pay period, the department manager initials the cards, indicates the rates of pay, and sends them to payroll. A payroll register is prepared from the cards by the payroll department. Cash equal to the total net pay in each department is given to the department manager, who pays the employees in cash.
3. In Min Wu Fortune Cookies employees are required to record hours worked by “punching” clock cards in a time clock. At the end of each pay period, the clock cards are collected by the department manager. The manager prepares a payroll register in duplicate and forwards the original to payroll. In payroll, the summaries are checked for mathematical accuracy, and a payroll supervisor pays each employee by check.
(a) Indicate the weakness(es) in internal control in each company.
(b) For each weakness, describe the control procedure(s) that will provide effective internal control. Use the following format for your answer:
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