Refer to the internal control questionnaire on a payroll system (Exhibit 5.10).

Required:

1. Prepare a table matching the questions to errors or frauds that could occur because of the absence of the control.
2. Which controls are preventive controls and which are detective?

 

Reguired a Required b Prepare a table matching the questions to errors or frauds that could occur because of the absence of the control. 1. Employees paid by check? 2. Special payroll bank account used? Hours for fictitious employee?3. Independent payroll check signers? 4. Independent bank statement reconciliation? 5. Payroll employees rotated, take vacations, and bonded? 6. Timekeeping independent of payroll?7. Wage rates approved? 8. Deduction authorizations signed by employees? 9. Hours and cost distribution approved by supervisor?10. Time clock used? 11. Payroll sheet signed and approved? 12. Personnel department reports employees terminated to payroll department? 13. Payroll compared to personnel files? 14. Independent check distribution? 15. Unclaimed wages controlled? 16. Occasional surprise payoff by internal auditors? 17. Personnel department reports employees hired to payroll departments?18. Payroll checks prenumbered? Sequence checked? 19. Qualified person tracks retirement? 20. Actuary employed? Assumptions reviewed? 21. Cost records reconciled to payroll? 22. Periodic audit of payroll by internal auditors?23. Reconciliation with tax reports? 24, Classification instructions? 25. Review by accounting officer?