Question

To maximize the effectiveness of internal controls over payroll, the person responsible for distributing employee paychecks should be:

a) Payroll manager
b) CEO
c) Human resources director
d) Accounting clerk

Answer 1

To enhance internal controls over payroll, distributing employee paychecks should NOT be the responsibility of someone with oversight or managerial control, such as a payroll manager, CEO, or HR director. An accounting clerk, due to their position within the accounting function and lack of managerial control, would be appropriate for this role to maintain segregation of duties.

Step-by-step explanation:

To maximize the effectiveness of internal controls over payroll, it is crucial to have a good segregation of duties within an organization. The distribution of employee paychecks should be handled by someone who does not have conflicts of interest and cannot manipulate payroll records for personal gain. Therefore, the correct choice would be:

• Accounting clerk

Accounting clerks are typically responsible for the administrative work regarding the processing and issuing of paychecks. They usually report to a higher authority such as a payroll manager or an accounting manager. This setup helps in maintaining a system of checks and balances, ensuring that the individual preparing and managing payroll is different from the one distributing paychecks, which is a fundamental principle of internal control to prevent fraud and ensure accuracy.