Required: State the broad objectives of the wages system. List the key questions

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Required:
State the broad objectives of the wages system.

List the key questions in the wages area.

Review the payroll system of the firm and comment on the strengths and weaknesses you identified.

Payroll system 351 CASE STUDY 9.2 Wages payroll: Troston plc A personnel file is kept for each employee in computer master files and also in hard copy. Master files are the auditor of Troston plc, a manufacturer of specialist equipment for use in dental hos- updated by the assistant on the basis of actices and incorporating a large number. New Pitas mponents in the assembly of the final product. The contracts of employment for joiners. two main sections. 'Component manufac- Wage rate forms. Termination notifications for leavers. Bonus rate forms The calculation of wages are 175 employees and their pay is based on basic rate, overtime payable at 1.5 times the basic rate bonus. The standard week is 40 hours and All forms, contracts and termination notifications are signed by the personnel department head. The produc tion director reviews the files periodically. He signs all contracts of employment. and group molovees record time by inserting a personal encoded The wages department plastic card (issued by the personnel department) into a card reader close to the factory office. All employees are The wages department staff alocated a personal code and a code showing the group sible to the chief accountant and are independent of the to which they belong and these details are included on personnel department. They are responsible for prepar the card. The card reader is under observation by offi ing the payroll from the data held in the central com- cals in the factory office. Daily, the factory office prints puter payroll system. However, before preparation of the recorded times, checks them for reasonableness and downloads the data to the central computer payroll system. Overtime is paid for weekly hours exceeding 40 Hours in excess of eight hours daily are authorized by the epartment (PCD), and are recorded on overtime authorization (OAFs) which are initialled by the head of PCD. The OAFs are held payroll they run an input validation run, 1h which is an exception report, containing the following: (a) Staff whose hours are less than 40 per week (b) Overtime hours per employee (c) Staff whose overtime exceeds ten hours per week head of the production control d orm (AFs). (d) Total recorded production hours and total possible payroll hours and shortfall n PCD and details are entered into an overtime file in the (e) Bonus calculation and reconciliation to production rtment desktop computer. This file is downloa daily to the central computer payroll system. Overtime) New staff employed since the last payroll. report. uests come from PCD or from group forepersons. The (g) Staff departed since the last payroll bonus is calculated on the difference between standard and actual time for batches of components or equipment Listings (5) and (g) above are checked to the master file assembled. A batch/equipment ticket (BET) containing by the personnel department. Listings (a) to (e) are sent to details of budgeted time as shown in the daily produc- the PCD for review and checking to the underlying records tion report accompanies each batch/piece. The tickets The personnel department and PCD give their approval pre-numbered) and daily production reports are prepared to the wages and salaries department and the preparation by PCD. Actual time taken is recorded on the BET by the of the payroll and bank transfer forms are then automati- group forepersons and initialled by them and counter- cally prepared by the central computer payroll system. The ntialled by the employee. On completion of a batch/ two employees in the wages and salaries payroll depart inspection clerk to show ment review the payrol and both sign it for approval. They payroll and both piece, the BET is signed by the compare the bank transfer forms to the are of the quality required. BETs are passed to PCD to enter actual times in the daily production reports on computer file) and to record standard and each group. These times are downloaded goods roll and forms are then sent to the chief accountant. payn lalso held actual times for Payment of wages to the central computer payroll system The personnel department This and The chief accountant reviews the payroll for reasona- bleness and initials it as evidence of approval. He sigrs the bank transfer forms before sending them to one of the directors for counter-signature. The cashier takes the department is responsible to the production director comprises a personnel manager and one assistant. bank transfer forms to the bank on

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