Payroll Security and Audit Flashcards

What is the principle of 'segregation of duties' in payroll and why is it important?

Answer: Dividing payroll tasks among multiple employees so that no single person can both initiate and approve a transaction, reducing the risk of fraud or error

Segregation of duties prevents payroll fraud and error by ensuring no one person controls an entire payroll transaction from setup through approval and payment.

In ADP, what feature allows administrators to restrict which payroll actions each user can perform?

Answer: Role-Based Access Control (RBAC) within ADP's security settings

ADP's Role-Based Access Control assigns specific permissions to user roles so each individual can only access and perform the payroll functions appropriate to their job responsibility.

What is a 'ghost employee' scheme in payroll fraud and how can ADP controls help prevent it?

Answer: A ghost employee is a fictitious or terminated employee left on the payroll to divert paychecks; ADP prevents this through user access controls, approval workflows, and regular audits of the employee master file

Ghost employee fraud involves adding fictitious payees or keeping terminated employees active; ADP mitigates this risk through access controls on employee setup and regular system audits.

How often should payroll audit reports be reviewed to detect unauthorized changes in ADP?

Answer: Each pay period, or at a minimum monthly, and before each payroll is processed

Best practices require reviewing ADP audit trail reports before each payroll run and at least monthly to catch unauthorized changes before they result in incorrect payments.

What is the purpose of ADP's Audit Trail Report?

Answer: To log all changes made to employee records, pay rates, deductions, and payroll configurations, including who made the change and when

ADP's Audit Trail Report creates a time-stamped log of every change made to the payroll system, recording the user, date, and nature of each modification for compliance and fraud detection.

Which payroll data elements should be treated as highly sensitive and protected under data privacy regulations?

Answer: Social Security numbers, bank account details, compensation amounts, and tax withholding information

Payroll data including SSNs, bank account numbers, wages, and tax information are classified as sensitive personal and financial data requiring encryption, access controls, and compliance with privacy laws.