Question

A CPA reviews a client's payroll procedures. The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for:

A. Reviewing and approving time reports for subordinate employees.
B. Distributing payroll checks to employees.
C. Hiring subordinate employees.
D. Initiating requests for salary adjustments for subordinate employees.

Answer 1

A CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for reviewing and approving time reports for subordinate employees.

Step-by-step explanation:

A CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for reviewing and approving time reports for subordinate employees. This is because the supervisor would essentially have the power to manipulate and approve their own time reports, leading to a potential conflict of interest and a lack of accountability.

Assigning the responsibility of distributing payroll checks to employees to the supervisor, on the other hand, does not necessarily compromise internal control, as long as appropriate checks and balances are in place to ensure accurate and proper distribution.

Hiring subordinate employees and initiating requests for salary adjustments are also not inherently problematic when assigned to the supervisor, as long as proper controls such as appropriate documentation and approval processes are in place.