Risks and controls in wages system
Risk ControlHours overstated
The hours worked may be over-stated asemployees only have to state how many hoursthey were at the inventory count.As employees arrive at the count, ensure theysign a sheet stating the time of arrival, and addthe time of departure when they leave. Thissheet to be under the control of an authorisedperson to ensure details and times entered arecorrect.
Employee names could be added to theattendance sheet without the employee beingthere; that is a colleague could add a friend’sname at the end of the day and the friend’swages shared later after payment.The number of staff working on the inventorycount should be agreed to the attendancesheet during the day by a responsible officialand any discrepancy investigated.Alternatively, the official can watch who signsthe sheet to ensure they do not add any namesapart from their own.
Employees should be paid at “time and a half”for the hours worked on the inventory count.There is a risk that the accounts departmentuse the wrong rate in calculating gross wagespayable.The rates used should be authorised by a seniorperson such as the Finance Director and agreedback to an authorised rate list issued by theHuman Resources department.
Incorrect calculation of net pay for the day
Employees will be paid overtime for attendingthe inventory count as well as a mileageallowance. There is the risk that either net payor the mileage allowance is incorrectlycalculated.The calculation of net pay and mileageallowance should be checked by the FinanceDirector and the payment sheet signed toconfirm this check has taken place.
Payment made to wrong employee
As the attendance sheet is to be signed by theemployee only, there is the risk that theemployee’s name is read incorrectly resulting inthe wrong employee being paid for attendingthe inventory count.The employees attending the inventory countshould be agreed in advance and a typed list of names available for the employee to signagainst to confirm attendance at the count.
Staff were paid mileage according to location of the store they normally worked at. The wrongstore could be allocated to a staff memberresulting in incorrect mileage being paid.Prior to paying the mileage claim, staff namesshould be checked to a list of employees ateach store. When overtime and expenses arepaid, the store should be noted on the paymentsheet and the sheet signed by the FinanceDirector to confirm the accuracy of thesedetails.