A CPA reviews an entity's payroll procedures. The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for:
A)distributing payroll checks to employees.
B)reviewing and approving time reports for subordinate employees.
C)hiring subordinate employees.
D)initiating requests for salary adjustments for subordinate employees.

Question

Quizplus · Accepted Answer

Distributing payroll checks to employees by a payroll department supervisor could lead to potential fraud or misappropriation of funds, as it does not provide adequate segregation of duties. Proper internal control requires that the duties of authorizing, recording, and custody of assets be separated among employees.

A CPA Reviews an Entity's Payroll Procedures