The most significant objective/risk in the practice of payroll system is “validity.” In regard to this matter, two issues we would need to consider:
First, it is necessary to mitigate risk that employees may exaggerate their work hours or over-time work to get paid more. Likewise, employees may have incentive to underreport their time-off/vacation to eventually retain more off-days.
Q1: Concisely and clearly discuss how firms can reduce this risk
Second, ghost employees – who used to work for the firm or who has never existed in the firm – could be paid, and this is another type of validity risk in the payroll system. So, it is necessary to figure out whether or not the firm is currently paying to a ghost employee. So the next question is
Q2: Identify three clues (p. 456) indicating an existence of a ghost employee even in the direct deposit payroll system. (That said, do not bring up a clue that can work only in a manual payroll processes.) Then concisely and clearly explain why you think the clue can indicate an existence of a ghost employee.
No length restriction, but do not exceed 300 words.
Note: To approach these Out of class participation questions, carefully read and contemplate TW textbook Ch 10 Section “Ethical issues related to payroll and fixed assets process (pp. 455-456).”