Chapter 1

Question 1

Galen Rana is a production worker at Gexo Manufacturing, which produces air-conditioning systems. After working there for 10 years, she discovers through conversations with a colleague with the same title and similar seniority that her wage is 20 percent lower than his wage. She feels that she has been a victim of discrimination.

Required:
Which law(s) govern her situation?

Answer 1

Lilly Ledbetter Fair Pay Act of 2009
FLSA
Civil Rights Act of 1964

NO - ADEA

Question 2

Emery Devi is a military veteran who requires many absences for medical reasons. The supervisor at Baytery Farms has demanded Emery either reduce the number of sick days used or provide a medical history to support the absences.

Required:
Which law(s) protect Emery?

Answer 2

HIPAA
USERRA

NO - FLSA

Question 3

Lyric Tesfaye is the new bookkeeper for Birch Online Enterprises, a small business consulting firm, and was hired to replace a long-time employee who retired. Lyric notices that the previous bookkeeper used a manual system. The company owner has said that Lyric may update the payroll system.

Required:
What options are available?

Answer 3

NO - Opt not to process payroll
ADP or programs like QuickBooks, Sage 100, or Microsoft Dynamics GP
Spreadsheets
MyPay Solutions
NO - Continue to use manual system

Question 4

Zyon Deng is a payroll accountant at Sucre Foods. Zyon works remotely from home, communicates with colleagues via Zoom, and has a VPN to prevent hackers from accessing the computer data.

Required:
Which privacy law(s) require Zyon to protect the information on the computer, even from family members?

Answer 4

Privacy Act of 1974
Common Law Privacy Act

NO- CFAA, HHS Privacy Act

Question 5

Regan Marrioni is in the payroll department at Seven Wonders International Foods. Regan is part of a social organization, along with several of his coworkers. Which of the following ethical standards could become compromised in social situations?

Answer 5

Confidentiality

Question 6

Kennedy Watson is the payroll accountant for Antizio Electronics, a company that engages in federal contracts. Kennedy wants to ensure that the company is compliant with the provisions of the Davis-Bacon Act. What is the process used to monitor payroll compliance in this situation?

Answer 6

Certified Payroll

Question 7

definition for USERRA.

Answer 7

Legislation that governs the treatment of military service personnel

Question 8

definition for Respect for Marriage Act.

Answer 8

The law guaranteeing marriage equality under any circumstances

Question 9

definition for internal controls documentation.

Answer 9

A provision of the Sarbanes–Oxley Act

Question 10

definition for HIPAA.

Answer 10

Protects the confidentiality of employee medical records

Question 11

definition for Lilly Ledbetter Fair Pay Act.

Answer 11

Repealed the 180-day statute of limitations on equal pay complaints

Question 12

definition for Sixteenth Amendment.

Answer 12

Instituted a tiered income tax on workers

Question 13

definition for Walsh–Healey Public Contracts Act.

Answer 13

Prohibited employment of individuals younger than 16 years of age

Question 14

definition for Independent contractor.

Answer 14

A worker who is not subject to a company’s direction or its payroll laws

Question 15

definition for Personal Responsibility, Work and Family Promotion Act of 2002.

Answer 15

Strengthened the child support provisions of PRWOR

Question 16

definition for IRCA.

Answer 16

Mandates completion of form I-9

Question 17

definition for Tax Cuts and Jobs Act.

Answer 17

Reframing federal employee income tax computations

Question 18

Ash Accardi is the accounting manager for a small local firm with full- and part-time staff.

Required:
How do FLSA guidelines regarding working hours apply to Ash’s employees?

Answer 18

Minimum wage considerations for both salaried and hourly workers
Whether the company is required to abide by the FLSA (no interstate commerce)
Maximum hours
Minimum age
Pay rates
Mandatory break periods

Question 19

Micah Sherman works in the payroll department at Radiance Windows. The employer has determined that the payroll functions should be moved to a cloud-based platform that can support its 500 employees, be used remotely, and has requested recommendations. What options could Micah propose?

Answer 19

SSL, VPN, and CAPTCHA tools
Online options with mobile access
Employee security and confidentiality

Explanation
When examining online services, employee security and confidentiality is important. There are online options with mobile access that can enable employees to submit time, check pay histories, and make updates to address or personal contact information. It is important that there are layers of security in place. This could include SSL, VPN, and CAPTCHA tools.

Question 20

Eden Motta is the office manager and payroll clerk for his company, composed of 12 employees. An employee, Xai Gladwin, stops by Eden’s office and wants to view their payroll record. What privacy regulations must Eden consider before granting coworker access?

Answer 20

The Privacy Act of 1974 allows an employee access to their payroll records.

Question 21

A group of employees who read on a website that income tax collection is illegal approach Jules Furst, the controller for a large company. They ask that the company stop withholding income taxes from their pay without an explanation of what laws govern income tax collection. What should Jules tell them?

Answer 21

The 16th Amendment to the U.S. Constitution created the legislation to support the collection of taxes from the employees. Additional Social Security Insurance Act was created to provide funding through tax withholdings.

Question 22

Callen Germain is a warehouse worker for a small grocery market. While some merchandise was being moved, the loading dock door unexpectedly fell and injured Callen.

Required:
How does OSHA apply to Callen for this type of injury?

Answer 22

Workers’ compensation insurance will provide for the coverage of wage compensation for the employee and covered medical expenses should the company’s work environment, and not employee error, be found at fault.
In this type of situation, there would be an OSHA inspection to ensure that the working environment was not the cause of the injury.
Another legal provision is that Callen may be protected under FMLA and may have to take unpaid leave if there is no accrued leave available, but the employment and medical benefits would be guaranteed.

NO - OSHA provides monetary benefits for injuries that Kalea sustained.

Question 23

Quinn Magnus is a payroll accountant for Mama Bear Trading Company. A coworker from the packaging department contacts Quinn via electronic communication and asks to see all employees’ payroll records for a specific payroll date.

Required:
What are options available for Quinn?`

Answer 23

Email request should be subject to additional scrutiny.
The Privacy Act of 1974 would protect the individual’s information from being disclosed.

Explanation
Ethically, Quinn should not provide the information. The Privacy Act of 1974 would protect the individual’s information from being disclosed. Additionally, an email request should be subject to additional scrutiny as the sender may be false.

Question 24

Parker Alberighi and Val van Peij are friends who work for the same company. Parker manages a manufacturing department, and Val supervises the payroll clerks.

Required:
Which ethical guidelines or rules would these friends need to remember when discussing work?

Answer 24

Non-disclosure of confidential information they have over the employees in their areas of responsibility
Exercising personal integrity to avoid any apparent conflicts of interest would also be appropriate for these individuals

Explanation
Both employees would have the responsibility for non-disclosure of confidential information they have over the employees in their areas of responsibility. Exercising personal integrity to avoid any apparent conflicts of interest would also be appropriate for these individuals.

Question 25

At Denniston Industries, employees have the option of choosing employer-sponsored health insurance. According to COBRA, what responsibilities does the employer have upon the termination of an employee?

Answer 25

The company must offer terminated employees COBRA coverage upon termination. The employee would be required to pay the health insurance premiums.

Question 26

Xan Preston is a new manager at Resterra Incorporated Xan is looking at using the E-Verify process for new hires.

Required:
What recommendations can you give regarding the differences between having employees complete the I-9 and the E-Verify process?

Answer 26

I-9 is still necessary if using E-Verify.
E-Verify allows employers to use the Internet to verify if employees are eligible to work in the United States.

Explanation
The E-Verify process allows employers to utilize the Internet to verify if the employees are eligible to work in the United States. This does not eliminate the need for employees to complete the I-9 since the E-Verify is a voluntary process and could require additional documentation from the employee.

Question 27

Landry Russell is a new employee in the payroll department for Palermo Industries. Landry has had several employees approaching with questions but is unsure how privacy regulations could affect the responses.

Required:
What advice would you give Landry about privacy laws and payroll?

Answer 27

The Privacy Act of 1974 allows an employee access to their payroll records.Correct
The employee’s privacy is an important consideration, and payroll workers need to be aware of updated information as it becomes available.Correct
Review U.S. Department of Labor OCFO-1 or the U.S. Department of Health and Human Services Privacy Act 09-40-0006.

Explanation
The Privacy Act of 1974 allows an employee access to their payroll records. The employee’s privacy is an important consideration and payroll workers need to be aware of updated information as it becomes available, for example U.S. Department of Labor OCFO-1 or the U.S. Department of Health and Human Services Privacy Act 09-40-0006.

Question 28

Peyton Hatton is a payroll accountant with Embotelladora Traders, Incorporated. One of the employees poses a question about the legality of the deduction for Social Security tax from their pay.

Required:
What should Peyton tell the colleague?

Answer 28

To assist families who experience diminished wages
To provide monetary benefits to dependents of retired or deceased workers
To assist younger workers when they retire or become too infirm to work

Question 29

Jaylin Thomas is the payroll clerk for Telemba Communications. One of the company’s employees, Dakota Boon, informs Jaylin that he feels that he was the victim of unequal pay three years prior.

Required:
What law(s) guide Dakota’s complaint?

Answer 29

Civil Rights Act of 1964Correct
FLSA
Equal Pay Act

Question 30

Blake Hudnall is Conosis Incorporated’s payroll accountant. During a casual conversation with coworkers, Blake learns that Teagan Vinkovic, a coworker, is deliberately overstating the number of hours worked during each pay period because of a personal economic situation.

Required:
Which ethical guidelines pertain to this situation? What should Blake do with this knowledge?

Answer 30

A lack of Integrity could make her an accomplice by allowing the transactions to continue overstated.
Professional competence and due care in the proper preparation of the payroll and verify externally with the supervisor or manager the actual hours workedCorrect
Professionalism to the company and ensuring that there is honest and true representation to the costs of the businessCorrect

Explanation
Blake should use the ethical guidelines from the AICPA to use Professional competence and due care in the proper preparation of the payroll and verify externally with the supervisor or manager the actual hours worked. Professionalism to the company and ensuring that there is honest and true representation to the costs of the business. Where Integrity could make her an accomplice by allowing the transactions to continue overstated.

Question 31

Amari Meyers works in the payroll department for Racine Traders. The company has experienced a decline in revenue over the past six months. The company president asks Amari to delay the remittance of payroll taxes to make more cash available to the company.

Required:
Which act would be violated if Amari complies with the company president’s request?

Answer 31

Current Tax Payment Act of 1943

Question 32

During a review of payroll records, Ocean Morena notices that a female employee in Department A receives a significantly lower salary than similarly skilled male employees in the same department.

Required:
What actions should Ocean take in this situation?

Answer 32

Gather the information that shows the differences in pay based on sex of the employee
Go to the manager or supervisor to discuss these differentials
If all channels fail, then Ocean may have a claim under the Equal Pay Act with or without the extension provided by the Lilly Ledbetter Fair Pay Act of 2009.
Go to the supervisor of the individual spoken to previously

Explanation
Under the Equal Pay Act of 1963, Ocean should first gather the information that shows the differences in pay based on sex of the employee. Secondly, Ocean should go to the manager or supervisor to discuss these differentials. Finally, if this has not been successful, Ocean should go to the supervisor of the individual spoken to previously. If all channels fail, then Ocean may have a claim under the Equal Pay Act with or without the extension provided by the Lilly Ledbetter Fair Pay Act of 2009.

Question 33

Sawyer Alescio is an accountant for Diado, a multinational firm. Sawyer notices that the new state payroll tax updates have not been installed during payroll processing in the firm’s software.

Required:
What ethical guidelines govern Sawyer’s behavior in this situation?

Answer 33

Ensure the tax withholding and remittance are correct with the new state payroll rates
Notify the supervisor of the discrepancy

Question 34

Nyx Croce is an employee of Autonder, a contractor that provides governmental construction services in Washington, DC. The current contract is for $250,000. Nyx is 22 and is paid $9.50 per hour.

Required:
How does the Walsh–Healey Public Contracts Act affect Nyx?

Answer 34

Wages at 1.5 times the regular hourly wage for those worked over 40 hours per week
Would require minimum wage for all hours worked under 40 per week
Would fall under Walsh-Healey Public Contracts Act

Question 35

Marlon Moyo works as a payroll clerk at Semiconductor, Incorporated. Marlon shares an office with three other co-workers and must examine documents containing personal information as a regular part of the duties. Based on the provisions of the Privacy Act of 1974, what responsibilities does Marlon have regarding handling the payroll records?

Answer 35

Marlon is responsible for keeping employee information such as addresses, dependents, compensation, payroll deductions, social security number, or garnishment information.
Marlon must ensure not to leave any sensitive information as disclosed by the Privacy Act of 1974 where individuals can access them.

Question 36

West is a senior payroll administrator for Falcive Landscape Design. The company has 15 employees and annual revenues of $10 million. The company has been using and maintaining manual payroll records for the last 20 years. The president of Falcive Landscape Design wants to explore options for computerized payroll processing.

Required:
Which payroll option is the most suitable for both West and Falcive Landscape Design?

Answer 36

QuickBooks
Sage 100

Explanation
Given the size of the company, a computerized accounting system (QuickBooks or Sage100) would be good options for internal processing of the company’s payroll.

Question 37

Angel Bellini is the payroll accountant for Pyrondo Fireworks, and has been asked for information about employees and independent contractors.

Required:
What are three of the key differences between employees and independent contractors?

Answer 37

The extent the employee’s work
Investment and control the company has over the employee
Ownership of any tools
Decisions
Management

Question 38

Payroll errors can lead to underreported wages and staffing issues.

True or False

Answer 38

True

Question 39

The ethical principle of integrity pertains to standards for remaining current with payroll professional development and certification.

True or False

Answer 39

False
Explanation
The ethical principle of integrity pertains to doing the right thing despite contrary influences.

Question 40

Which ethical principle emphasizes the use of moral judgment in all actions?

Answer 40

Confidentiality

Question 41

Which act adds monetary penalties for illegal discriminatory employer actions?

Answer 41

Civil Rights Act of 1991

Question 42

Which of the following is a payroll accountant’s responsibility when preparing payroll?

Answer 42

Accuracy of payroll computations and disbursement information

Question 43

What is the most significant payroll challenge for small businesses?

Answer 43

Availability of payroll-trained personnel

Question 44

Why is outsourced payroll popular among accounting professionals?

Answer 44

Time demands for payroll processing decrease.

Question 45

According to the PCAOB, personal or family ownership in excess of five percent of a client’s business may compromise a payroll accountant’s:

Answer 45

objectivity and independence.

Question 46

Employers must request a(n) _________blank by using form _________blank for the Internal Revenue Service to track a firm’s payroll tax obligations.

Answer 46

Employer Identification Number; SS-4

Question 47

The _________blank granted small employers tax incentives for implementing automatic retirement plan enrollment for their employees.

Answer 47

SECURE Act