Question

In the weekly computer run to prepare payroll checks, a check was printed for an employee who had been terminated the previous week. Which of the following controls, if properly utilized, would have been most effective in preventing the error or ensuing its prompt detection?

A) A control total for hours worked, prepared from time cards collected by the timekeeping department.
B) Requiring the treasurer's office to account for the numbers of the prenumbered checks issued to the computer department for the processing of the payroll.
C) Use of a check digit for employee numbers.
D) Use of a header label for the payroll input sheet.

Answer 1

The most effective control for preventing a terminated employee from receiving a payroll check or for the prompt detection of such an error would be Option D, the use of a header label for the payroll input sheet that includes employment status indicators.

Step-by-step explanation:

The student's question pertains to identifying the control that would have been the most effective in preventing or ensuring prompt detection of a payroll error, where a check was printed for a terminated employee. Option A, concerning control totals for hours worked, would not prevent the check from being issued to a terminated employee, as it doesn't pertain to employment status. Option B, while it accounts for the number of checks, doesn't verify the status of the employees receiving the checks. Option C, the use of a check digit for employee numbers, would not prevent the issuance of a check unless that system specifically flags terminated employees which is typically not its primary function. Option D, however, involves using a header label on the payroll input sheet, which could be designed to include termination dates or employment status, thereby preventing inappropriate payroll disbursement and ensuring the prompt detection of errors in the payroll system.

In this context, the most effective control would be using a header label (Option D) that includes employment status indicators. This would enable the payroll system to automatically detect and remove terminated employees from the payment cycle, thereby preventing the disbursement of funds to employees no longer employed by the company.