An auditor is reviewing the 'Segregation of Duties' (SoD) in the payroll process. Which two roles should be separated?

Answer options:

Authorizing time cards and Distributing paychecks.

Hiring employees and Training employees.

Reviewing payroll reports and Reconciling the bank account.

Updating employee addresses and Updating employee tax withholdings.

How to approach this question

Look for Authorization vs Custody (Asset handling).

Full Answer

A.Authorizing time cards and Distributing paychecks.✓ Correct

Segregation of Duties seeks to separate Authorization (approving time), Recording (preparing payroll), and Custody (distributing checks). Combining Authorization and Custody allows for fraud (e.g., ghost employees).

Common mistakes

Separating two compatible administrative tasks.

Question 52 All questions Question 54

Practice the full CPA ISC Practice Exam 3

82 questions · hints · full answers · grading

More questions from this exam

Q01A CPA is advising a client who is migrating their legacy on-premise ERP system to a cloud-based s...Medium Q02During a review of a client's cloud governance structure, an auditor notes that the client uses a...Medium Q03An auditor is evaluating the 'Processing Integrity' principle for a financial institution's loan ...Hard Q04A company uses a batch processing system to update inventory records overnight. The 'Grandfather-...Hard Q05During a walkthrough of the change management process, an auditor observes that the 'Developer' r...Medium

View all 82 questions →