7. Payroll System

Question 1

Which three of the following would ensure that the correct payments are made to employees?

a) The payroll should be checked back to individual personnel records

b) Payroll totals should be compared to adjusted budgets on a monthly basis

c) Total tax deductions should be reconciled with tax returns

d) BACS transfer lists should be authorised by the head of personnel

Answer 1

a, b & d

c is incorrect as it does not directly relate to employee’s payments

Question 2

Which one of the following internal control procedures is likely to prevent fictitious employees from being added to payroll?

a) Payroll standing data is periodically checked on a line-by-line basis to independently held employee details

b) Use of hierarchical passwords over standing data files

c) Pre-authorisation of all amendments to payroll standing data by an independent official

d) Supervision of the wages pay-out by an independent official

Answer 2

b

The key is that fictitious employees never make it onto the payroll

Question 3

Indicate whether the following statements are true or false

a) The payroll master file should contain details of employee’s cumulative statutory deductions to date

b) Reviewing changes to statutory deductions helps to ensure that changes to the calculations of gross pay are processed correctly

Answer 3

Both false

statutory deductions do not impact gross pay figure