The local community feels that secondary school education is a necessity in our society and that lack of education leads to a number of social problems. As a result, the local school board has decided to take action to reverse the rising dropout rate. The board has voted to provide funds to encourage students to remain in school and earn their high school diplomas. The idea is to treat secondary education like a job and pay students. The board, however, could not agree on the details for implementing this new plan. Consequently, you have been hired to devise a system to compensate students for staying in school and earning a diploma.

As you devise your compensation scheme, be sure it meets the following general control objectives for the payroll cycle:

• All personnel and payroll transactions are properly authorized.

• All employees are assigned to do productive work, and they do it efficiently and effectively.

• All transactions are accurately recorded and processed.

• Accurate records are maintained.

• All disbursements are proper.

Write a proposal that addresses these five questions:

a. How should the students be compensated (e.g., for attendance, grades)?

b. How and by whom will the payments be authorized?

c. How will the payments be processed?

d. How should the payments be made (e.g., in cash or other means)?

e. When will the payments be made?



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