Venture Volunteers for troubles teens is a not-for-profit entity that provides counselling services to troubles teens and adolescents. While the majority of its funding comes from government, the group also participates in a variety of fundraising activities. To manage the fundraising activities and administer the various programs, there is an executive director, two accounting staff, and several youth counsellors. All staff are salaried and the payroll is processed biweekly. Employees are not paid overtime, but rather they use "flex" time to compensate for overtime. As a result, it is unusual for the payroll to change from pay period to pay period. All of the staff are on direct deposit, so no payroll cheques are issued. The responsibility for the payroll is split between the two accounting staff, Maddie and Ricardo. Maddie is responsible for preparing and posting the payroll while Ricardo is responsible for processing infrequent items such as staff terminations and administering the benefits program. The actual payroll processing is outsourced to a payroll service provider, Paystab Inc. Paystab processes the direct debit payments to employees abd the remittance of all with-holding taxes.
Maddie maintains a spreadsheet listing employees with the approved pay rates. This is maintained in Excel and is password protected. The spreadsheet is sent to Paystab Inc., and it processes the payroll. Only Maddie and Ricardo have access to the spreadsheet and only Ricardo can add or remove employees. Paystab provides Maddie with the payroll register that details the individual pay amounts and totals. Based on this report, Maddie prepares the journal entry for posting to the general ledger. This is reviewed by Ricardo for accuracy, and for unusual amounts and significant fluctuations. Every quarter he prints a copy of the payroll master file and reviews it to ensure only actual employees are listed. He initials a copy of this master file to document this review.
When new staff are hired, they are provided with a new employee package. This package includes a signed offer letter, all tax and medical forms, a confidentiality package, an ethics statement, and a job description. These forms are maintained in an employee personnel file and stored in locked cabinets in the accounting area. Ricardo will update the employee master file when the employee begins work.
Maddie is notified of any staff terminations by the employee's manager. This is done via e-mail. No change can be made to the employee payroll file unless it is provided in writing and the organization deems e-mails adequate. There is a staff "leaving" checklist that needs to be completed and one of the requirements is to remove the employee from the payroll. Once completed, this is filed in the employee's personnel file.
All salary changes are requested by the departmental managers and sent to the executive director for approval. Once approved, an official letter is signed by the executive director and maintained in the employee's personnel file. Ricardo is provided with a copy so he can update the employee's salary in the master file.
Required:
Identify eight strengths of the payroll process at Venture Volunteers. For each strength identify what the test of that control could be.
