Concept And Meaning Of Internal Control Of Wage Payment

Concept And Meaning Of Internal Control Of Wage Payment

Wages are one of the major portion in the total cost of production. There is always a chance of fraud in wage payment. Therefore, an effective administrative and accounting control system must be implemented by the management to minimize fraud and to keep the labor cost minimum. As already stated, a number of departments are set up for the effective utilization of labor force and its proper accounting and controlling. These departments are required to work in a coordinated manner and to support the management in controlling labor cost by recording and reporting their activities on regular basis. The management should evaluate and revise its controlling system to find out leakages and to stop such leakages in time. Fraud in wage payment may result in various ways like inclusion of dummy worker in pay-roll, manipulating hours, recording extra overtime, using a wrong wage rate and registering absent workers.