The completeness of “wages” figure can be tested by comparing the number of time cards to be processed with transaction on wages sheet. This type of control technique is called
|a) check total|
b) control total
c) occurrence correction
d) check digit
The Correct Answer Is:
d) check digit
Control Techniques in Payroll Processing
In payroll processing, ensuring accuracy and completeness is of paramount importance to both employers and employees. One crucial aspect of this process is verifying the total wages paid to employees, a task that can be achieved through various control techniques.
In this discussion, we will delve into the concept of “check digit” as a control technique and explain why it is the correct option.
Furthermore, we will explore the other options – check total, control total, and occurrence correction – and elucidate why they are not the most appropriate methods for verifying the completeness of wages figures.
Explanation of correct answer:
Option d) Check Digit:
A check digit is a numerical value added to a set of numbers, which is calculated using a specific algorithm. It is used to detect errors in data entry or transmission. In the context of payroll processing, a check digit can be applied to employee identification numbers or other relevant figures.
By using a predetermined formula, the system can quickly verify if the entered numbers are valid. If an error is detected, it prompts the user to recheck the input.
In the scenario presented, the completeness of the “wages” figure can be ensured by using a check digit in the form of an additional number associated with each transaction. This number is generated based on a specific algorithm, making it unique to each entry.
When processing time cards and cross-referencing them with the wages sheet, the system can automatically check the validity of the figures. If there is a discrepancy, it indicates a potential error that requires further investigation. This control technique significantly reduces the likelihood of processing incorrect wage figures.
Why the other options are incorrect:
Option a) Check Total:
A check total is the sum of a set of numbers, used as a preliminary verification step. It is calculated independently of the main processing and serves as a reference point for comparison.
While check totals are useful for detecting basic arithmetic errors, they do not have the capacity to identify more complex discrepancies, such as transposition errors or incorrect data entry.
Therefore, while check totals can be a part of the overall control process, they are not as robust as a check digit for ensuring the completeness of wages figures.
Option b) Control Total:
A control total, similar to a check total, is a sum of a set of numbers. However, it is used as a benchmark for the entire dataset rather than a preliminary verification step. Control totals are typically used to verify the accuracy of an entire batch of data by comparing it to a pre-established total.
While control totals are valuable for detecting large-scale discrepancies, they may not be as effective for identifying specific errors related to individual transactions, making them less suitable for verifying wages figures at the granular level.
Option c) Occurrence Correction:
Occurrence correction is not a standard term in the context of control techniques for payroll processing. It does not pertain to a specific method for verifying the completeness of wages figures. Therefore, it is not the correct option in this scenario.
In conclusion, the most appropriate control technique for verifying the completeness of “wages” figures is the use of a check digit. This method employs a unique numerical value generated through a specific algorithm, allowing for efficient and accurate validation of data entries.
While check totals and control totals have their merits in certain contexts, they are not as effective as a check digit for ensuring the accuracy of individual transactions.
Additionally, “occurrence correction” is not a recognized control technique in this context. Understanding and implementing these control techniques is essential for maintaining the integrity of payroll processing systems.