Problem
Barbara Minker owns South Texas Falldown Construction Company that specializes in residential construction in new gated communities. Her staff consists of Wilson Straight (the office accountant), Georgia Mint (the secretary), 12 job managers, and about 200 workers including carpenters, plasterers, and licensed plumbers. New workers are hired using the following procedures:
1) The job managers hire new workers who show up at one of the job sites looking for work. This is a common practice in the industry in which turnover among workers is a constant problem.
2) A job manager who hires a new worker has the worker fill out and sign a brief form that includes the worker's name, social security number, and contact information.
3) Every Monday and Wednesday afternoon, the job managers give their completed new worker forms to Wilson Straight to ensure that the new workers are added to the payroll.
4) Late Thursday afternoon, each job manager gives Wilson Straight a payroll report that shows the time worked for each worker, which he uses to prepare pay slips for each worker.
5) Wilson Straight gives the pay slips to Georgia Mint, who totals them; she then goes to the bank and makes a cash withdrawal for the total payroll for the workers. Finally, she gives each job manager the exact amount of cash needed to pay that job manager's workers.
Barbara Minker had often considered paying employees with checks instead of cash, but many of the workers complained that checks were often difficult to cash and that they needed cash right away to buy food and pay rent. This problem and a shortage of workers forced Barbara to continue to pay workers in cash.
Evaluate payroll-related internal controls for South Texas Falldown Construction Company and make suggestions for improvement in its payroll-related internal controls.