Fundamental Payroll Certification Fundamental Payroll Audits and Record Retention 5

Question 1

A company stores payroll records in a cloud-based system and then deletes them after the required retention period. What additional step should be documented during an audit?

Accepted Answer

A certified destruction record or deletion log confirming records were properly disposed of after the retention period

Answer

Maintaining a destruction log documents that records were retained for the required period and then disposed of appropriately.

Question 2

Which audit procedure would BEST detect errors in the calculation of employee net pay?

Accepted Answer

Recalculating gross-to-net pay independently using payroll inputs and tax tables

Answer

Independent recalculation of gross-to-net pay is the most direct way to detect computational errors in payroll processing.

Question 3

What is the primary purpose of segregation of duties in the payroll function?

Accepted Answer

To reduce errors and prevent fraud by dividing payroll tasks among multiple individuals

Answer

Segregation of duties prevents any single individual from controlling all aspects of a payroll transaction, reducing fraud and error risk.

Question 4

An employer discovers that state income tax was withheld at the wrong rate for employees working in multiple states. Which corrective step is most critical?

Accepted Answer

Issue corrected W-2c forms and file amended state returns, then repay or collect the difference

Answer

Errors in state withholding require corrected W-2c forms, amended state filings, and adjusting under- or over-withheld amounts.

Question 5

Under which circumstance is an employer required to withhold federal income tax at a flat 22% supplemental rate?

Accepted Answer

When paying bonuses or other supplemental wages up to $1 million, if paid separately from regular wages

Answer

Supplemental wages such as bonuses paid separately may be withheld at the flat 22% optional rate instead of using the aggregate method.

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Fundamental Payroll Audits and Record Retention 5