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CS Professional · Internal and Forensic Audit · Internal Audit of Specific Functions

An internal auditor at Bharat Logistics Ltd notices that salaries of 12 employees who resigned over the past six months continued to be credited to bank accounts, all to accounts that appear in no other HR record. Which control, if operating properly, would have best prevented this?

A timely HR-to-payroll separation process, with exit clearance sign-off and prompt deactivation of the employee in the payroll master file, would have prevented the payments. The salaries continued because leavers were not removed, and the other controls address unrelated risks.

  1. AAnnual increment review by the department head
  2. BTimely intimation of separations from HR to payroll, with deactivation of the employee in the payroll master file and exit clearance sign-offCorrect
  3. CQuarterly physical verification of fixed assets
  4. DApproval of overtime by the shift supervisor

Explanation

Salaries continued after resignation because payroll was not updated for leavers. A preventive control linking exit clearance and HR separation records to prompt deactivation in payroll addresses this. Increment review, asset verification and overtime approval relate to different risks.

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