CPP CPP Payroll Accounting & Reporting 3

Question 1

Segregation of duties in payroll processing means:

Accepted Answer

Having different individuals handle payroll preparation, approval, and disbursement

Answer

Segregating duties ensures no single person controls all phases of payroll, reducing the risk of undetected fraud or error.

Question 2

A 'ghost employee' in payroll fraud refers to:

Accepted Answer

A fictitious person added to payroll to divert funds to the fraudster

Answer

A ghost employee is a fictitious person placed on the payroll whose paychecks are fraudulently diverted by the perpetrator.

Question 3

Which control best detects payroll overpayments or unauthorized pay increases?

Accepted Answer

Regularly comparing actual payroll costs to budgeted amounts and investigating variances

Answer

Budget-to-actual variance analysis is a detective control that flags unusual overpayments or unauthorized compensation changes.

Question 4

The purpose of a payroll suspense account is to:

Accepted Answer

Temporarily hold unresolved payroll discrepancies pending correction and proper coding

Answer

A suspense account temporarily holds items that cannot be immediately coded correctly, allowing time for research and correction.

Question 5

During a payroll audit, which document best verifies that pay rates are properly authorized?

Accepted Answer

Personnel/HR records documenting management-approved pay rates

Answer

Personnel records with signed management authorization are the authoritative source auditors use to verify that pay rates are approved and accurate.

CPP - Certified Payroll Professional Practice Test