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ACCA Applied Knowledge · Business and Technology · Internal controls

Which of the following duties, if performed by the same employee, represents the most serious breach of segregation of duties in the payroll function?

Adding new employees to the payroll master file while also approving the payment run is the most serious breach. One person could create a fictitious employee and authorise payment to them, with no independent check to detect it.

  1. AAdding new employees to the payroll master file and approving the payroll payment runCorrect
  2. BPrinting payslips and filing them
  3. CCalculating overtime hours from approved timesheets and checking the totals twice
  4. DAnswering employee queries about tax codes and answering holiday queries

Explanation

Someone who can create employees on the master file and also approve payment could set up a fictitious employee and pay them without anyone else noticing. The other combinations are administrative and do not combine authorisation with the ability to create or conceal fraud.

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