Exam (elaborations)
DEPARTMENT OF ACCOUNTANCY AUDITING 300/BCTA 2024 QUESTION BANK: Salaries & Wages
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DEPARTMENT OF ACCOUNTANCY AUDITING 300/BCTA 2024 QUESTION BANK: Salaries & Wages
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UNIVERSITY OF JOHANNESBURGDEPARTMENT OF ACCOUNTANCY
AUDITING 300/BCTA
2024
QUESTION BANK: Salaries & Wages
QUESTIONS
Question 1: Dynamic Clothes Ltd
Question 2: Fox River Penitentiary
Question 3: Builders Ltd
Question 4: Sam Sales (Pty) Ltd
,QUESTION 1 (50 MARKS)
You are the auditor of Dynamic Clothes Ltd. The company manufactures clothing for
the fashion industry. A production manager heads the manufacturing division. He
controls the work of twenty foremen and approximately 500 workers. Wages are paid
every Friday, based on hours worked during the previous calendar week.
New workers are employed by the foremen. At the start of each working week
(Monday) the foreman hands a blank clock card to each of his workers. The workers
insert their names and employee numbers on the clock cards and then use them for
that working week. The clocking device is situated at the entrance to the factory.
Workers clock in and out at the entrance to the factory by putting their clock cards in
the clocking device.
The foremen hand the used clock card to a wage clerk on Monday mornings. The
clock cards are divided alphabetically amongst four wage clerks. Each clerk is always
allocated the same section of the alphabet for which he/she is fully responsible.
The clerks perform the following work on the clock cards:
1. Calculate the total number of hours worked per each clock card and record it on the
relevant clock card.
2. Enter the hours worked per individual (by employee number) into the weeklywages
file on the computer.
After each wage clerk has entered the hours worked into the computer, the computer
calculates each worker’s gross pay, deductions and net pay by using the wage rates
and deductions according to the personnel information kept on a data-base. The
weekly wages report is then printed by the computer. This report is kept in the wages
department.
One of the wage clerks verbally informs the accountant of the amount needed for the
week’s net wages. The accountant then prepares a cash cheque for the exact amount
of the week’s net wages, after which the cheque is cashed by a wage clerk.
The computer prints pay envelopes for the workers to be paid, bearing the workers’
names and employee numbers. Each wage clerk fills the pay envelopes for the letters
of the alphabet for which he/she is responsible. After all the pay envelopes are filled,
no money should be left. If a discrepancy occurs, the pay envelopes are checked and
corrected by the wage clerks.
The pay envelopes are then sealed. On Friday afternoons the pay envelopes are
handed to the relevant foremen for the weekly payout. Each foreman pays out the
wages to the workers working for him. Unclaimed wages are given back by the various
foreman to a wage clerk.
, REQUIRED:
Identify the weaknesses in the wage system described above and recommend
improvement(s) for each weakness identified. (50)
QUESTION 2 (40 MARKS)
Fox River Penitentiary is a maximum security prison. Due to the history of attacks on
prison guards by inmates, and subsequently the high turnover of prison guards, it was
decided by management to change from paying the guards on a monthly salary basis,
to a weekly wage system.
Each security guard possesses a prison ID card which serves a number of uses. The
card is used to identify the guards, allow the guards access to certain areas of the
prison (depending on their access rights to these areas), as well as being used to
record the number of hours worked by the guards. As the guards arrive at the prison
to begin their shifts, they are required to proceed directly to the prison warden’s office
where they swipe their cards to reflect the time that they begin their shifts. At the end
of the guard’s shift, they are again required to go to the warden’s office where they
must swipe their card which will then indicate the time that the guards ended their shift.
When the security guards are employed by the prison, they are required to enter their
details on a standard employee form. This information is then given to the warden’s
secretary who inputs the information onto the system. The system then produces the
staff ID card for the guards.
The warden does not believe that there is a need for a Human Resources Department.
All appointments and dismissals are handled by the warden himself. Any changes to
employee information and profiles are given directly to the warden’s secretary who
enters the information directly onto the system.
Michael Schofield, the head security guard and deputy warden is responsible for the
recording of shifts worked by the guards. Due to the large number of duties he has,
means that he seldom has time to oversee the clocking procedure. There have been
a few isolated instances where guards have not clocked out after their shifts, which
thus resulted in them being paid for overtime not worked.
Every Thursday evening, a printout is obtained from the clocking machine which
indicates the number of hours worked by each security guard for the week. Mr.
Schofield then takes this printout to the wage clerk (Mr. Fibonacci) who then produces
the payroll.
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