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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Which of the following is not an internal control for preventing or detecting payroll fraud?

  1. a. Having only one person responsible for the payroll function, due to confidentiality concerns
  2. b. Requiring mandatory vacations for payroll personnel
  3. c. Increasing the use of direct deposits
  4. d. Outsourcing payroll administration
  5. e. Conducting periodic unannounced audits

To determine

Identify the option that is not considered as an internal control for preventing or detecting payroll fraud.

Explanation

Payroll:

Payroll refers to the total amount that is required to be paid by the company to its employees during a week, month or other period. It is the financial record of the wages and bonus, net pay, salary and deductions of a company’s employees.

The payroll frauds can be prevented in the following way, they are as follows:

  • Make cash payments or checks minimally and increase the use of direct deposit of payroll    checks.
  • Require mandatory vacations for those with payroll responsibilities, having other employees perform this function in their absence.
  • Conduct a thorough pre-employment reference check for all payroll personnel.
  • Outsource payroll administration.
  • Conducting unannounced audits periodically as to ensure that all employees on the payroll actually work for the company...

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