The Multiple Choice Questions Blog

Which ONE of the following control procedures WILL reduce the risk of unauthorised disclosure of payroll data?

Select ONE answer:

1. Access controls
2. Exception reporting of high amounts of net pay
3. Back-up procedures
4. Independent review of payroll

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Access controls and encryption of data will reduce the risk of unauthorised disclosure. Exception reporting and an independent review of the payroll, would help identity unauthorised changes to payroll information. Back-up procedures would help in the protection of company data.
2. Not correct
3. Not correct
4. Not correct

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Alex Manufacturing Ltd is a company that is expanding rapidly and is regularly taking on new employees.

The payroll is processed in-house in the accounts department using a desktop PC.

The financial controller, Lucy, is worried that fictitious employees could be included on the payroll by a dishonest employee from the accounts department.

Which ONE of the following internal controls is most likely to prevent this from happening?

Select ONE answer:

1. Payroll standing data is periodically printed out and checked on a line-by-line basis to independently held employee details
2. Pre-authorisation of all amendments to payroll standing data by an independent official
3. Supervision of the wage payout by an independent official
4. Use of hierarchical passwords over standing data files

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Use of hierarchical passwords over standing data files – this will allow the company to restrict access to standing data files to a responsible official, yet still allow other employees to process the wages. This means that an unscrupulous employee cannot access the part of the system where new employees would be added and hence will prevent the fraud. This is therefore the correct answer.

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following statement below about the internal controls over payroll, select whether the statement is True, False, No Significant or Material Impact, or No Impact.

• Reperformance of calculations is unnecessary where the payroll system is computerised.

Select ONE answer:

1. True
2. No Significant or Material Impact
3. False
4. No Impact

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – while the risk of errors can be reduced in a computerised payroll system, a sample of calculations should still be checked. This may also bring to light errors with standing data and input.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following statement below about the internal controls over payroll, select whether the statement is True, False, No Significant or Material Impact, or No Impact.

• Leavers and joiners should be authorised by a senior member of staff.

Select ONE answer:

1. False
2. True
3. No Significant or Material Impact
4. No Impact

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following statement below about the internal controls over payroll, select whether the statement is True, False, No Significant or Material Impact, or No Impact.

• The payroll should be checked back to individual employee personnel records regularly.

Select ONE answer:

1. True
2. False
3. No Significant or Material Impact
4. No Impact

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.