The following questions concern internal controls in the payroll
and personnel cycle. Choose the best
response.
a A factory foreman at Steblecki Ltd discharged an hourly worker
but didn't notify the payroll department.
The foreman then forged the worker's signature on time cards and,
when giving out the cheques,
diverted the payroll cheques drawn from the discharged worker to
his own use. The most effective
procedure for preventing this activity is to:
(1) require written authorisation for all employees added to or
removed from the payroll
(2) have a paymaster with no other payroll responsibility
distribute the payroll cheques
(3) have someone other than staff who prepare or distribute the
payroll obtain custody of unclaimed
payroll cheques
(4) from time to time, rotate those who distribute the
payroll.
b The auditor reviews Pyzi's payroll procedures. An example of an
interna l control deficiency is to assign
to a department supervisor the responsibility for:
(1) distributing payroll cheques to subordinate employees
(2) reviewing and approving time reports for subordinates
(3) interviewing applicants for subordinate positions before hiring
is done by the human resource
department
(4) initiating requests for salary adjustments for subordinate
employees.
(a) Answer :(2) have a paymaster with no other payroll responsibility distribute the payroll cheques.
Explanation :Appointing a paymaster with sole responsibility to distribute the payroll cheques is most suitable remedy for this issue. This must be effective in preventing these kinds of frauds and misappropriations.
(b) Answer :(1) distributing payroll cheques to subordinate employees.
Explanation :Reviewing and approving time reports,interviewing applicants and initiating requests for salary adjustments come under the responsibilities of a department supervisor.It is better to assign the distribution of payroll cheques to a paymaster.
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The following questions concern internal controls in the payroll and personnel cycle. Choose the best response....
The following questions concern audit testing of the payroll and personnel cycle. Choose the best response. a A common aud it procedure in the audit of payroll transactions involves tracing selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that: (1) only proper employees worked and their pay was correctly computed (2) jobs on wh ich employees worked were...