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Following Are a Number of Potential Misstatements That Might Occur

Question 4

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Following are a number of potential misstatements that might occur in the personnel services cycle. Also listed are a number of necessary controls for this cycle.For each potential misstatement, indicate, using the assigned letter, the necessary control that would most likely prevent or detect the misstatement.

Premises:

Responses:

Payroll may be recorded for services not received.

Use of time clock procedures and supervisory approval of time tickets.

Payroll tax returns may not be filed on a timely basis.

Computer reports all changes to the personnel data master file.

Payroll checks may be distributed to unauthorized recipients.

Employer identification needed to receive payroll check.

Employees may not be paid for hours not worked.

Batch totals of hours worked prepared by payroll department and verified by the computer.

Employees may receive unauthorized rate increases.

Computer limit test on the number of hours worked and the amount of each payroll check.

Payroll transactions may include incorrectly keyed or invalid data.

Assignment of responsibility for timely filing of returns.

Fictitious employees may be added to payroll.

Personnel department authorizes all rate changes to the personnel data master file.

Payroll data may be lost during submission to IT.

An appropriate level of management reviews all purchases charged to their responsibility center on a timely basis.

Terminated employees may remain on the payroll.

Personnel department removes terminated employees from the personnel data master file.

Premises:

Payroll may be recorded for services not received.

Payroll tax returns may not be filed on a timely basis.

Payroll checks may be distributed to unauthorized recipients.

Employees may not be paid for hours not worked.

Employees may receive unauthorized rate increases.

Payroll transactions may include incorrectly keyed or invalid data.

Fictitious employees may be added to payroll.

Payroll data may be lost during submission to IT.

Terminated employees may remain on the payroll.

Responses:

Use of time clock procedures and supervisory approval of time tickets.

Computer reports all changes to the personnel data master file.

Employer identification needed to receive payroll check.

Batch totals of hours worked prepared by payroll department and verified by the computer.

Computer limit test on the number of hours worked and the amount of each payroll check.

Assignment of responsibility for timely filing of returns.

Personnel department authorizes all rate changes to the personnel data master file.

An appropriate level of management reviews all purchases charged to their responsibility center on a timely basis.

Personnel department removes terminated employees from the personnel data master file.

Correct Answer:

Premises:

Responses:

Payroll may be recorded for services not received.

Payroll tax returns may not be filed on a timely basis.

Payroll checks may be distributed to unauthorized recipients.

Employees may not be paid for hours not worked.

Employees may receive unauthorized rate increases.

Payroll transactions may include incorrectly keyed or invalid data.

Fictitious employees may be added to payroll.

Payroll data may be lost during submission to IT.

Terminated employees may remain on the payroll.