Background

Below is a narrative for the payroll system at BIGBUCKS, Inc..

BIGBUCKS has five departments, each with a supervisor. The supervisor of each
department triggers (initiates) the payroll process.

Narrative
Each department supervisor totals the hours for each employee. He notes these totals on a
summary employee timesheet. He then forwards the timesheet to data processing.
Data processing enters the timesheet data (employee number and hours) into the computer.
The computer computes the normal hours and the overtime hours. The computer then reads
the employee's withholding and pay-rate data from the Employee database (maintained on
disk) and computes the gross pay, net pay, and deductions for each employee. As it is
computed, the computer logs the pay data onto a temporary disk file (you can refer to it as
TDF). Then, the payroll department prints a paycheque and payroll stub for each employee
on the printer in the payroll department.
At the end of the day, the payroll department reads the TDF and prints a summary of the
payroll data on a printer in the payroll department. The payroll manager reconciles the
summary with the paycheques and then stamps each paycheque with the necessary
signature stamp. The payroll manager then delivers each paycheque to the appropriate
employee.

Notes:
This narrative leaves several elements that need further investigation and clarification:
How is the timesheet summary disposed of?
How is the payroll reconciliation document disposed of?
What is the process if the paycheques and payroll summary DO NOT reconcile?
How long is the Temporary Data File held and how is it cleared before the next pay
period?
How long is the timesheet data file held and how is it cleared before the next pay period?
Is the Employee Data file updated with current payroll data, and if so when?
Do employees have to acknowledge received of paycheques and payslips?
This should not be considered a standard description of a payroll calculation process as
there are several other internal control problems in this description.
TABLE OF ACTIVITIES
Department Supervisor
1) Totals the hours for each employee
2) Notes these totals on a summary employee timesheet
3) Forwards the timesheet to data processing.
Data Processing
4) Enters the timesheet data into the computer
Computer
5) Computes normal and overtime hours
6) Reads the employee's data from the Employee database
7) Computes the pay and deductions for each employee
8) Logs the pay data onto TDF
Payroll department
9) Prints a paycheque and payroll stub in the payroll department.
10) Reads the TDF
11) Prints a summary of the payroll data in the payroll department
12) Reconciles the summary with the paycheques
13) Stamps each paycheque with the necessary signature stamp
14) Delivers each paycheques to the appropriate employee
Employee