Question

Which of the following best describes effective internal control over payroll?

1) The preparation of the payroll must be under the control of the personnel department.
2) The confidentiality of employee payroll data should be carefully protected to prevent fraud.
3) The duties of hiring, payroll computation, and payment to employees should be segregated.
4) The payment of cash to employees should be replaced with payment by checks.

Answer 1

The best description of effective internal control over payroll is option 3: The duties of hiring, payroll computation, and payment to employees should be segregated.

Step-by-step explanation:

The best description of effective internal control over payroll is option 3: The duties of hiring, payroll computation, and payment to employees should be segregated.

This means that different individuals or departments should be responsible for each step of the payroll process. By separating these duties, it helps to prevent fraud and errors from occurring.

For example, the personnel department could be in charge of hiring employees, the accounting department could handle the computation of payroll, and the finance department could be responsible for making payments to employees. This way, there is a system of checks and balances in place to ensure accuracy and prevent any single individual from having too much control over the payroll process.