According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?

Question

Options

• AThe employee's name listed on organization's payroll is compared to the personnel records.
• BPayroll time sheets are reviewed and approved by the timekeeper before processing.
• CEmployee access to the payroll database is deactivated immediately upon termination.
• DChanges to payroll are validated by the personnel department before being processed.

• A
  7% (4)
• B
  46% (26)
• C
  34% (19)
• D
  13% (7)

Explanation

According to the IIA guidance, reviewing and approving payroll timesheets by the timekeeper before processing is considered least effective in managing the risk of payroll fraud. While this procedure might detect some errors or irregularities, it does not provide a robust control against fraud because the timekeeper can collude with employees or fail to review timesheets adequately. On the other hand, procedures such as comparing payroll lists to personnel records, deactivating payroll database access upon termination, and validating changes to payroll by the personnel department involve checks and balances that are more effective at preventing or detecting fraudulent activities.

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