Question

An internal audit of the payroll function revealed several instances in which a payroll clerk had added fictitious employees to the payroll and deposited the checks in accounts of close relatives. What control should have prevented such actions?

Using time cards and attendance records in the computation of employee gross earnings.

Establishing a policy to deal with close relatives working in the same department.

Having the treasurer's office sign payroll checks.

Allowing changes to the payroll to be authorized only by the personnel department.

Answer 1

Answer -

An internal audit of the payroll function revealed several instances in which a payroll clerk had added fictitious employees to the payroll and deposited the checks in accounts of close relatives, here the control should have to prevented such actions by allowing changes to the payroll to be authorized only by the personnel department, by segregating these functions helps to prevent fraud.

Hence, Option - (d) is Correct.

Note - Option - (a), Option - (b) and Option - (c) are incorrect, because all these statement are False.