Which of the following is a major control risk in the payroll area?
A)Theft of inventory by staff
B)Fictitious persons cashing pay cheques
C)Contracts being awarded to relatives of employees
D)Expenses being recorded as assets in order to manipulate earnings

Question

Quizplus · Accepted Answer

Fictitious persons cashing pay cheques is a major control risk in the payroll area. This can lead to unauthorized and fraudulent disbursements of funds. Incorrect setup and maintenance of the payroll system can result in payments being made to non-existent employees or to employees who have already left the organization. This risk can be mitigated by implementing controls such as proper segregation of duties, regularly reviewing payroll reports, and performing background checks on employees. Other options listed (A, C, D) are not major control risks in the payroll area.

Which of the Following Is a Major Control Risk in the Payroll