CPP CPP Industry Standards 5 — Questions and Answers
Question 1: The APA's Code of Ethics requires CPP holders to avoid conflicts of interest. Which scenario best illustrates a conflict of interest in payroll?
- A payroll manager who also assists with benefits enrollment
- A payroll specialist who approves their own overtime hours (Correct answer)
- A payroll clerk who runs reports for the accounting department
- A CPP who trains new hires on payroll software
Correct answer: A payroll specialist who approves their own overtime hours
A payroll specialist approving their own overtime hours is a direct conflict of interest and violates segregation of duties and ethical standards.
Question 2: Which industry standard framework is most commonly used to assess the maturity of a payroll department's internal controls?
- COBIT
- COSO Internal Control Framework (Correct answer)
- ISO 9001
- Six Sigma DMAIC
Correct answer: COSO Internal Control Framework
The COSO Internal Control – Integrated Framework is the most widely recognized standard for assessing the effectiveness of internal controls, including those in payroll.
Question 3: Under APA best practices, how frequently should a payroll department conduct a self-audit of its processes and controls?
- Only when directed by external auditors
- At least annually (Correct answer)
- Every five years
- Only after a system conversion
Correct answer: At least annually
APA best practices recommend that payroll departments conduct internal self-audits at least annually to proactively identify compliance gaps and control weaknesses.
Question 4: In the context of payroll industry standards, what does 'positive pay' refer to?
- A policy guaranteeing employees receive a minimum base pay
- A bank fraud prevention service that matches issued check details against presented checks (Correct answer)
- Processing payroll before the pay period ends
- Paying employees a day early as an incentive
Correct answer: A bank fraud prevention service that matches issued check details against presented checks
Positive pay is a bank service where the employer sends a file of issued check details to the bank, which then flags any presented checks that don't match.
Question 5: Which APA publication is the primary reference for understanding federal payroll tax deposit rules and schedules?
- IRS Publication 15 (Circular E) (Correct answer)
- APA's Payroll Answer Book
- DOL Fact Sheet #17A
- NACHA Operating Guidelines
Correct answer: IRS Publication 15 (Circular E)
IRS Publication 15 (Employer's Tax Guide, also known as Circular E) is the authoritative reference for federal payroll tax deposit rules and schedules.
Question 6: Under payroll industry standards, which practice is recommended when an employee disputes a paycheck calculation?
- Immediately reissue a corrected check before investigation
- Document the dispute, investigate promptly, and correct any error in the next practicable payroll (Correct answer)
- Require the employee to submit a formal grievance before any review
- Defer all disputes to the legal department
Correct answer: Document the dispute, investigate promptly, and correct any error in the next practicable payroll
Best practice is to document the dispute, conduct a timely investigation, and if an error is found, correct it in the next practical payroll cycle or off-cycle if required by state law.
Question 7: The CPP recertification requirement set by the APA requires credential holders to earn how many Recertification Credit Hours (RCH) within each 5-year cycle?
- 60 RCH
- 120 RCH (Correct answer)
- 30 RCH
- 90 RCH
Correct answer: 120 RCH
CPP holders must earn 120 Recertification Credit Hours (RCH) within each 5-year recertification period to maintain their credential.
CPP CPP Industry Standards 5
The APA's Code of Ethics requires CPP holders to avoid conflicts of interest.
Which scenario best illustrates a conflict of interest in payroll?