Which of the Following Circumstances Most Likely Would Cause an Auditor

question 14

Multiple Choice

Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?

• A) There are significant unexplained variances between standard and actual labor cost.
• B) Payroll checks are disbursed by the same employee each payday.
• C) Employee time cards are approved by individual departmental supervisors.
• D) A separate payroll bank account is maintained on an imprest basis.

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Definitions:

Presentment

The act of formally presenting a document, such as a check or draft, for acceptance or payment.

Dishonored

Refers to a financial instrument (check, promissory note) that is not accepted or paid upon presentation.

Primarily Liable

Being the first or main party responsible for fulfilling a debt or obligation.

Secondarily Liable

Pertains to a party that holds liability not as the primary party responsible but as a backup in case the primarily liable party fails to fulfill their obligations.