Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?
A) Timecards should be carefully inspected by those persons who distribute pay envelopes to the employees.
B) One person should be responsible for maintaining records of employee time for which salary payment is not to be made.
C) Daily reports showing time charged to jobs should be approved by the foreman and compared to the total hours worked on the employee timecards.
D) Internal auditors should make observations of distribution of paychecks on a surprise basis.

Question

Quizplus · Accepted Answer

Option C describes an effective internal control where daily reports that show time charged to jobs should be approved by the foreman and then compared to the total hours worked on the employee timecards. This ensures that the production department employees are properly validating the timecards at the time-recording stations, and prevents any possible errors or fraudulent activities. Option A is not effective as the persons who distribute pay envelopes may not necessarily have the necessary authority or knowledge to properly inspect the timecards. Option B suggests only one person should be responsible for maintaining records, which increases the risk of error or fraud with no segregation of duties. Option D is not an effective control for this specific purpose as it does not confirm that the employees are properly validating timecards at the time-recording station.

Which of the Following Is an Effective Internal Control Used