An auditor would consider internal control over a client'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

Having custody over unclaimed paychecks could lead to misappropriation of funds, as it combines record-keeping and custody functions, violating the principle of segregation of duties.

An Auditor Would Consider Internal Control Over a Client's Payroll