An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for:
A)hiring subordinate payroll department employees.
B)having custody over unclaimed paychecks.
C)updating employee earnings records.
D)applying pay rates to time tickets.

Question

Quizplus · Accepted Answer

The payroll department supervisor having custody over unclaimed paychecks presents a significant risk of misappropriation of funds, as it violates the principle of segregation of duties. This principle requires that the responsibilities for authorizing transactions, recording transactions, and handling the related asset should be divided among employees to reduce the risk of errors or fraud.

An Auditor Would Consider Internal Control Over an Entity's Payroll