Which of the following procedures would be most likely to be considered a weakness in an entity's internal controls over payroll?
A)The personnel department sends employees' termination notices to the payroll department.
B)The employee who distributes payroll cheques is responsible for later distributing unclaimed payroll cheques to the employees absent at time of payroll distribution.
C)Payroll cheques are prepared by the payroll department and signed by the treasurer.
D)A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department's payroll summary.

Question

Quizplus · Accepted Answer

Allowing an employee who distributes payroll cheques to also be responsible for distributing unclaimed cheques creates a potential for fraud or misuse of the unclaimed cheques. This violates the principle of segregation of duties, which requires that no single individual should have control over two or more phases of a transaction or operation. The other options demonstrate appropriate controls, such as proper notification of employee terminations (A), appropriate authorization and segregation of duties for cheque signing (C), and proper documentation and approval for payroll expenses (D).

Which of the Following Procedures Would Be Most Likely to Be