Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?
A)There are significant unexplained variances between standard and actual labor cost.
B)Payroll checks are disbursed by the same employee each payday.
C)Employee time sheets are approved by individual departmental supervisors.
D)A separate payroll bank account is maintained on an imprest basis.

Question

Quizplus · Accepted Answer

Significant unexplained variances between standard and actual labor cost may indicate fraud, as employees may be recording more hours than they actually work and diverting the extra pay to themselves. Option B may suggest the possibility of check tampering, but not necessarily payroll fraud. Option C is a normal control procedure for payroll processing. Option D is a standard control procedure for handling payroll transactions.

Which of the Following Circumstances Most Likely Would Cause an Auditor