Reference no: EM131713396

Background

Adriatic Plumbing Supply Corp has a warehouse and a small administrative office—Alexei and his wife Sonia are the owners. They deal with customers and vendors. Their daughter Natalie handles all the bookkeeping, including payroll. The one operating department, a warehouse, has 9 hourly personnel, and is managed by Stefan [not a family member]. The following narrative describes the procedures for processing the warehouse payroll every week.

Narrative

Stefan is responsible for initiating the weekly payroll activity for hourly employees. He collects the time cards and totals the hours for each employee. Then, he enters each employee’s name and hours worked on a payroll spreadsheet. Stefan then forwards the spreadsheet to Natalie. He files the time cards alphabetically by employee name.

Natalie keeps a payroll binder that contains key information on all hourly employees [such as personal data, pay rates and withholding rates] She calculates the straight-time and overtime hours for each employee from the spreadsheet and the payroll binder. She reads the employee's withholding and pay-rate data from the employee binder and computes the gross pay, net pay, and deductions for each employee. She then prepares a prenumbered paycheck and payroll stub for each employee on the printer in the payroll department. She also enters the payroll data on the spreadsheet. She makes two copies of the original documents. The checks and spreadsheet are delivered to Sonia. Natalie sends one copy of the spreadsheet, payroll checks and stubs to Adriatic’s accountant [an independent CPA, who maintains Adriatic’s accounts and prepares its tax return]. Natalie files the third set by date.

Sonia reconciles the spreadsheet to the paychecks and then signs each paycheck . she files the spreadsheet by date and delivers the checks and stubs to Stefan, who distributes them to the appropriate employees.