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The Acme Garment Manufacturing Company employs 20 staff in Malaysia under permanent
terms of contract. During the busy season, the firm will also employ around 100 part-time
workers. These part-time workers are paid according to the number of hours worked and the
hourly rates.





The personnel department is responsible for handling the recruitment of

permanent staff. The personnel manager authorizes the hiring of new permanent staff by
signing two copies of the employment contract, which state the terms of employment and the
amount of salary. One copy of the employment contract is for the staff, and the other copy is
kept in the personnel file. Newly recruited staff is not required to sign the employment contract.
The firm has two production supervisors who handle all the companyǯs affairs relating to the
recruitment of part-time workers including setting the hourly rate. As the turnover rate of part-
time workers is very high, the personnel department does not set up a personnel file for part-
time workers




The production supervisorsǯ office and the part-time workersǯ working place are
both on the second floor of the factory. A timecard system is adopted to keep track of the hours
worked by each part-time worker. Timecards are located at the factory entrance. Each worker
writes down the time of commencement and cessation of work on his timecard every day. The
part-time workers any come to work at any time of the day, thus it is not feasible for the
production supervisors to be present watching the workers update their timecards. As the part-
time workers are paid on hourly basis, the production supervisors are not required to prepare
any absentee reports.

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At each month end, the payroll department prepares a payroll sheet for
permanent staff based on the prior monthǯs payroll sheet. If there are changes in salary rates,
addition or resignations of staff, the personnel manager will prepare a memo to notify the
payroll department of the changes. Payroll checks are then prepared for the financial controller
to approve. Each payroll checks is drawn on individual staff names and crossed.
Each of the production supervisors prepares a payroll sheet for part-time staff. The production
supervisors collect the timecards and compute the total hours worked for the month. The
payroll sheet records the total hours worked and the hourly rate agreed by the production
supervisors with the part-time workers. The timecards will be destroyed immediately after
preparation of the payroll sheet. The payroll department checks the production supervisorsǯ
calculations by multiplying the hours worked by the hourly rate and signs the payroll sheets as
evidence of checking. A cash checks is prepared for the financial controller to approve and sign.

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The financial controller reviews the payroll sheet for permanent staff and
signs the payroll checks. On the first day of each month, each permanent staff member collects
the payroll checks directly from the financial controller and acknowledges receipt by signing the
payroll sheet. For the part-time workersǯ payroll, the financial controller reviews the payroll
sheet and signs a cash checks. The cashier and an accounting staff member collect cash from the
bank and the payroll department prepares pay packet for each part-time worker. The
production supervisors collect the pay packets for their team of part-time workers and are
responsible for the distribution of the pay packets to their team members. The production
supervisors sign the payroll sheets on behalf of the workers, and this serves as evidence of
acknowledgement of receipt of payment





a. Identify and explain eight (8) internal control weaknesses in the payroll procedures of
Acme Garment Manufacturing Company. (16 marks)
 p Newly recruited staff is not required to sign the employment contract
Patotnye sign

p the personnel department does not set up a personnel file for part -time workers
Patot kna ade personnel file gak 

p Timecards are located at the factory entrance.
ptot ltak kt ngn supervisorǯs office so sng nk monitor

p Each worker writes down the time of commencement and cessation of work on his
timecard every day
Org leh tipu

p The part-time workers any come to work at any time of the day,
Kna wt proper schedule 4 part timer 

p The timecards will be destroyed immediately after preparation of the payroll sheet.
Kna simpn sampai workers dh dpt payment 


p The production supervisors sign the payroll sheets on behalf of the workers, and this
serves as evidence of acknowledgement of receipt of payment
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p The cashier and an accounting staff member collect cash from the bank and the payroll
department prepares pay packet for each part-time worker.