Salif, Inc. has 15 full-time manufacturing employees. Their weekly payroll averages $17,800, but it varies from week to week primarily due to overtime worked. Last month, the weekly average climbed to $18,700, but no additional overtime had been authorized.

All employees swipe their badges at the beginning and end of their shift. They are also supposed to swipe their badges when they come and go at lunchtime. The computer automatically calculates the hours worked for each employee. A clerk prints out the time sheets, which are then approved by each employee's supervisor and a manager. The manager rarely finds any problems with the time sheets and frequently signs them without checking them carefully. Once the time sheets are approved, the clerk sends the information to a payroll processor, who completes all the remaining payroll functions. Employees' money is direct-deposited into their accounts, and they receive a pay stub each week.

When management investigates, they discover that a supervisor had authorized additional overtime for two employees to complete an important project. However, the supervisor had not obtained formal authorization for the overtime. The authorization was given verbally by the plant manager. What internal control procedure would have avoided the extra overtime expense?

Question

Salif, Inc. has 15 full-time manufacturing employees. Their weekly payroll averages $17,800, but it varies from week to week primarily due to overtime worked. Last month, the weekly average climbed to $18,700, but no additional overtime had been authorized.
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All employees swipe their badges at the beginning and end of their shift. They are also supposed to swipe their badges when they come and go at lunchtime. The computer automatically calculates the hours worked for each employee. A clerk prints out the time sheets, which are then approved by each employee's supervisor and a manager. The manager rarely finds any problems with the time sheets and frequently signs them without checking them carefully. Once the time sheets are approved, the clerk sends the information to a payroll processor, who completes all the remaining payroll functions. Employees' money is direct-deposited into their accounts, and they receive a pay stub each week.
​
When management investigates, they discover that a supervisor had authorized additional overtime for two employees to complete an important project. However, the supervisor had not obtained formal authorization for the overtime. The authorization was given verbally by the plant manager. What internal control procedure would have avoided the extra overtime expense?

Quizplus · Accepted Answer

The Answer of Salif, Inc. has 15 full-time manufacturing employees. Their weekly payroll averages $17,800, but it varies from week to week primarily due to overtime worked. Last month, the weekly average climbed to $18,700, but no additional overtime had been authorized.
​
All employees swipe their badges at the beginning and end of their shift. They are also supposed to swipe their badges when they come and go at lunchtime. The computer automatically calculates the hours worked for each employee. A clerk prints out the time sheets, which are then approved by each employee's supervisor and a manager. The manager rarely finds any problems with the time sheets and frequently signs them without checking them carefully. Once the time sheets are approved, the clerk sends the information to a payroll processor, who completes all the remaining payroll functions. Employees' money is direct-deposited into their accounts, and they receive a pay stub each week.
​
When management investigates, they discover that a supervisor had authorized additional overtime for two employees to complete an important project. However, the supervisor had not obtained formal authorization for the overtime. The authorization was given verbally by the plant manager. What internal control procedure would have avoided the extra overtime expense?