Unit 2: Documentation and Internal Controls Flashcards Preview

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Flashcards in Unit 2: Documentation and Internal Controls Deck (15):

What are some ways to keep confidential information confidential

should have a locked storage space to keep employee files and payroll records for their hard copy records and a protocol for all soft copy (computer files)


In order to pay an employee, the payroll department must collect and maintain certain information. This includes but is not limited to:

1, Employee personal info
- name, SIN, Date of birth

2. Job related info:
- start date, job title, work location, rate of pay and pay frequency

3. Federal and Provincial TD1s

4. Any Dir Dep info (bank, bank id, transit number and account) or a void cheq. (must be a personal account not a business account) Sometimes it can be a line of credit account but many banks won't allow it

5. other inf.
- address, phone number, benefits information (coverage amounts, dependants, beneficiaries etc)


What is the company information that the employees should have

1. detailed job description
2. expected hours of work
3. maybe a package with all relevant documentation for a new employee to fill out as well as company policies and expectations


TD1 forms are used for what

determine the amount of tax the employer must deduct form each employee


TD1 can be reduced for different tax credits including;

1. supporting dependents such as a spouse, children or relatives
2. being over the age of 65
3. collecting a pension
4. being disabled

5. being a student


for the TD1 who is responsible for the correct completion

employee's responsiblitiy


for TD1 what if no form is filled out?

the employer is to assume basic personal amount


For TD1 When the form comes back to Payroll what should happen

once received back from the employee, the payroll department should review the form and ensure it was filled out correctly and signed (keep it on file)


SIN what does it stand for

social insurance number


What is SIN

the government's way to identify every citizen, and must be collected form every employee for remittance purposes


what if a SIN starts with 9>

this is for a temporary citizen who have and must show the employer a work permit


What does a work permit show

shows the permitted work, any restrictions and expiry date


Can you hire an employee who does not have a SIN?



How do you validate a SIN
SIN: 123 456 782

1. remove the last digit (check digit) 2
2. take out the 2nd, 4th, 6th, and 8th digits (2,4,6,8)

3. Double them: 4,8,12, 16
4. add the digits together (4+8+1+2+1+6 = 22)

4. add the 1st, 3rd, 5th, and 7th digits together
1+3+5+7 = 16

5. Add the two totals together 22 + 16 = 38

6. if the total is a multiple of 10, the check digit is a 0

7. if not, subtract the total from the next multiple of 10 (40) and check digit should e the same difference between the total and the number (40 - 38 = 2)


what are some internal controls that should be in place to avoid fraud or abuse of responsibility?

1. segregation of duties
- the process of assigning different tasks to different personnel
- key rule one employee collects data, the other verifies it
2. approval of pertinent documents
- once filled out, non-payroll personnel should provide all payroll documents
(new hire documents, wage increases, termination letters etc by employee's manager)
3. rotating tasks
- so different personnel are performing them at any point in time
4. performing periodic audits of all payroll data
5. performing system backups
- make sure info is correct
6. time clocks/ bar code systems
- used to avoid employees changing their hours or reporting incorrectly
- management should verify all hours prior to submitting to payroll
7. pay cheques
- should require 2 signatures
- require supporting documentation
- should be signed by someone outside of payroll as well as distributed
- cheques should be pre-numbered and locked up when not in use
8. Direct deposits
- can be used to eliminate the possibility of pay cheq fraud, but still should be approved by management with supporting documentation prior to being sent to the bank
9., Utilization of a separate bank account
- so that no other amounts other than payroll amounts are transferred to the account
10. monthly bank reconciliation
- to make sure the bank account balance is in line with what has been withdrawn and is outstanding on the account