Fundamental Payroll Certification Fundamental Payroll Audits and Record Retention 2

Question 1

Under the Fair Labor Standards Act (FLSA), how long must payroll records for non-exempt employees be retained?

Accepted Answer

3 years

Answer

FLSA requires payroll records, including time cards and wage rate tables, to be kept for at least 3 years.

Question 2

Which type of payroll audit compares total payroll register amounts to general ledger accounts to identify discrepancies?

Accepted Answer

Reconciliation audit

Answer

A reconciliation audit matches payroll register totals against the general ledger to ensure financial accuracy.

Question 3

An employer discovers that I-9 forms for several terminated employees were destroyed after 1 year. Which statement is correct?

Accepted Answer

This violates the rule requiring retention for 3 years from hire or 1 year post-termination, whichever is later

Answer

I-9 forms must be retained for 3 years from the date of hire or 1 year after termination, whichever is later.

Question 4

During a payroll audit, an auditor finds that a salaried exempt employee's pay was docked for a partial-day absence. What is the primary concern?

Accepted Answer

Potential loss of the employee's FLSA exempt status

Answer

Improper deductions from an exempt employee's salary for partial-day absences can jeopardize their FLSA-exempt status.

Question 5

Which IRS form is used by employees to claim exemption from federal income tax withholding?

Accepted Answer

Form W-4

Answer

Employees use Form W-4 to inform employers of their withholding allowances, including claiming an exemption from withholding.

Fundamental Payroll Certification Practice Test