Question

The risk of the addition of fictitious employees to the payroll by the person performing the payroll processing function is reduced by

A. Performing periodic floor checks of employees on the payroll.
B. Requiring the same employee to perform the monthly payroll bank reconciliation.
C. Requiring a reconciliation of hours between time cards and hours paid.
D. Requiring that payroll additions be approved by the controller.

Answer 1

Requiring payroll additions to be approved by the controller is an effective measure to reduce the risk of fictitious employees being added to the payroll.

Step-by-step explanation:

The risk of adding fictitious employees to the payroll can be reduced by requiring payroll additions to be approved by the controller. By implementing this control, the person responsible for payroll processing is held accountable and must obtain approval from a higher authority before making any additions to the payroll. This ensures that there is oversight and reduces the likelihood of fraudulent activities.

For example, if an employee attempts to add a non-existent person to the payroll, the controller would need to review and verify the addition before approving it. This step creates an additional layer of scrutiny and minimizes the risk of unauthorized payroll additions.

Therefore, requiring payroll additions to be approved by the controller is an effective measure in reducing the risk of fictitious employees being added to the payroll.