AIS Chapter 17 Quiz

An inadvertent data entry error caused an employee's wage rate to be overstated in the payroll master file.

• Have the personnel department maintain a hash total of employee wage rates • Check hash total against payroll master file total after each update. • Test the reasonableness of wage rate changes during data entry to detect large errors. • Have supervisors review departmental payroll expenses as a way of detecting these kinds of problems.

A programmer obtained the payroll master file and increased his salary.

- physical access controls • Implement authentication and authorization controls such as user ID's, passwords, and access control matrix to limit access • Have supervisors review reports of all changes to payroll master data to detect this type of fraud

c. During data entry, the hours worked on an employee's time card for one day were accidentally entered as 80 hours, instead of 8 hours.

- use limit check (ex. set max at 8, or 12 if you allow OT)

Use of a payroll service bureau or a PEO provides which of the following benefits?

-fewer staff needed to process payroll -less need for developing and maintaining payroll tax experience -lower cost of processing payroll

6. Employees are automatically removed from the payroll master if they do not turn in a timecard

A sick employee or one on vacation could be "fired" because they did not turn in a timecard.

Where should unclaimed paychecks be returned?

Cashier

3. Factory supervisors determine pay rates

Factory supervisors can overpay or underpay new hires

Which department should have responsibility for authorizing pay-rate changes?

HRM

Factory supervisor hires all job applicants and forwards their W-4 form to the payroll clerk.

No documentation on pay raises could lead to employee disputes and litigation. The factory supervisor could give the fictitious employees raises.

Which of the following is an important supporting document to authorize the transfer of funds to the payroll bank account?

Payroll register

Some time cards were lost during payroll preparation; consequently, when paychecks were distributed, several employees complained about not being paid.

Reconcile job time records to employee clock cards

7. The factory supervisor distributes pay checks.

The supervisor can conveniently keep the pay checks of fictitious or fired employees.

5. Weekly time cards are not collected until the next Monday.

Time cards could be altered over the weekend with fictitious or false information in the case of a vendetta against another employee. Someone could "fire" an employee by removing his timecard over the weekend

A computer operator used an online terminal to increase her own salary.

Use passwords and an access control matrix to restrict access to authorized personnel

Which of the following statements is true ? a.) Financial statements report the value of employee knowledge and skill. b.) Turnover and absenteeism are costly. c.) All employees must fill out time cards. d.) Default configurations of ERP packages typically provide good segregation of duties.

b.) Turnover and absenteeism are costly

To maximize effectiveness of internal controls over payroll, which of the following persons should be responsible for distributing employee paychecks?

departmental supervisor

Which document lists the current amount and year-to-date totals of gross pay, deductions, and net pay for one employee?

earnings statement

Online processing is most useful for which of these tasks?

making changes in employee benefit choices

Traditionally, accountants have been most involved with which portion of the HRM/payroll cycle?

payroll

Which control procedure would be most effective in detecting the failure to prepare a paycheck for a new employee before paychecks are distributed?

record counts of timecards submitted and time cards processed

A factory supervisor failed to notify the HRM department that an employee had been fired. Consequently, paychecks continued to be issued for that employee. The supervisor pocketed and cashed those paychecks.

· Implement a policy prohibiting supervisors from picking up or distributing paychecks. Instead, have the payroll department distribute all paychecks. · Investigate all unclaimed paychecks.

The organization was fined $5000 for making a late quarterly payroll tax payment to the IRS.

· Use IRS Publication Circular E, which provides instructions for making required remittances of payroll taxes, to configure the system to make payroll tax payments. · Set up a quarterly "tickler" or reminder message to the cashier about making the required payroll tax remittance.

f. A factory employee punched a friend's time card in at 1:00 p.m. and out at 5:00 p.m. while the friend played golf that afternoon.

· Use biometric controls to record time in and time out · Observe (in person or by video surveillance) time clock activity to uncover punching other people's cards

A large portion of the payroll master file was destroyed when the disk pack containing the file was used as a scratch file for another application.

· Use internal and external file labels to identify the contents and expiration date of all active files · Train computer operators to carefully examine external file labels before file processing begins.

A fictitious employee payroll record was added to the payroll master file.

• multifactor authentication • Compare number of checks issued to record of number of employees - Require positive identification of recipients as each paycheck is distributed. This would likely result in the paycheck not being claimed, which would then trigger an investigation. • Periodically print and verify all changes to the payroll master file