Advise the college on the weakness in its systems and procedures due to payroll fraud.
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Advise the college on the weakness in its systems and procedures due to payroll fraud.
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- Which of the following activities most likely would be considered a weakness in an entity’s internal control over payroll?a. A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department’s payroll summary. b. Payroll checks are prepared by the accounts payable department and signed by the treasurer. c. The employee who distributes payroll check returns unclaimed payroll checks to the payroll department. d. The personnel department sends employees’ termination notices to the payroll department.What is NOT an example of internal control procedures that help prevent payroll fraud? a.Outsource Payroll Administration b.Require mandatory vacations c.Make sure only one person handles payroll functions d.Conduct periodic unannounced auditsEvaluate the difficulties associated with preventing and detecting payroll fraud.
- What are solutions a company can take to protect itself against any employees committing fraud through the payroll system?What are the most common errors and frauds in the personnel and payroll cycle? Which control characteristics are auditors looking for to prevent or detect these errors and frauds?Give suggestions to avoid payroll related fraud in companies.
- What is the purpose of the following control procedures (i.e., what threats is it designed to mitigate)? i. Establishing a separate payroll checking account and funding it as an imprest account.In the event of payroll fraud, discuss the suggestion that the human elements of control systems are frequently more important than the software elements in ensuring that records are correct.Control risk is the risk that a material misstatement in an account will not be prevented or detected on a timely basis by the client’s internal controls. The best controlto prevent or detect fictitious payroll transactions is to(1) use and account for prenumbered payroll checks.(2) obtain authorization from human resources for hiring, pay rate, job status andtermination.(3) verify internally authorized pay rates, computations, and agreement with thepayroll register.(4) conduct periodic independent bank reconciliations of the payroll bank account.
- For the purpose of internal control, the same person who prepares payroll checks should also distribute them. True or False True FalseThe following are typical questions that might appear on an internal control questionnaire for payroll activities: 1. Is there adequate separation of duties between employees who maintain human resources records and employees who approve payroll disbursements? 2. Is there adequate separation of duties between personnel who maintain timekeeping or attendance records for employees and employees who distribute payroll checks? Describe the purpose of each of the above controlsAnswer the following questions and give an example for each case: What category does inventory related fraud fall into? What documents does a perpetrator use to commit billing fraud? What are the three categories in payroll fraud? How is skimming scheme fraud carried out? In which areas can the embezzlement scheme be identified? What can cause fraud to be committed in the presentation of financial statements?
