ICAEW ARF · Chapter 6 · Question 1 of 11
Which control best reduces the risk of fictitious ('ghost') employees being added to the payroll?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Additions to the payroll master file are authorised by the HR department, independently of the payroll staff
Explanation
A ghost employee is created by adding a fictitious person to the payroll so that their pay can be diverted. Requiring independent HR authorisation for new joiners prevents payroll staff from adding employees themselves. Sealed payslips, casting checks and clocking-in do not stop someone being added to the master file.
More Controls over payroll, inventory and cash MCQs
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- Q4Which of the following is a physical control over inventory?
- Q5During a year-end inventory count, count sheets are sequentially numbered, issued to count teams and accounted for at the end of the…
- Q6A client uses a perpetual inventory system with continuous counting instead of a full year-end count. Which of the following would be…
- Q7Which of the following controls mainly addresses the valuation of inventory, rather than its existence or completeness?