Which control could be used to mitigate the threat of hiring unqualified or larcenous employees

Overview of HRMThehuman resources management (HRM)/payroll cycleis a recurring set ofbusiness activities andrelated data processing operationsassociatedwith effectivelymanaging employee workforce.The more important tasksinclude:1. Recruiting and hiring new employees2. Training3. Job assignment4. Compensation (payroll)_under payroll system5. Performance evaluation6. Discharge of employees due to voluntary or involuntary termination

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HRM and Payroll Cycle

6 Tasks

Business activities and related data processing operations associated with effectively managing employees:
*Recruiting and hiring new employees (1)
*Training (1+)
*Job Assignment (1+)
*Compensation (1+)
*Performance evaluation (1+)
*Discharge of employees due to voluntary or involuntary termination (1)

(1) - performed once
(1+) - performed repeatedly or is ongoing

Estimated Cost to Replace EE

*Replacing employees is 1.5 times greater then that of an employees annual salary

HRM and Payroll Cycle Activities

1) Update master data: new hires, terminations, wage schedules, tax tables, deduction tables
2) Validate time and attendance
3) Prepare payroll
4) Distribute payroll
5) Disburse taxes and miscellaneous deductions

Major Functions of AIS in HRM/PR

A major function of the AIS in the HRM/ Payroll cycle is to provide adequate internal controls to ensure meeting the following objectives (see HRM/ PR objectives)

*all payroll transactions are properly authorized
*all recorded payroll transactions are valid
*all valid, authorized payroll transactions are recorded
*all payroll transactions are accurately recorded
*applicable government regulations regarding remittance of taxes and filing of payroll and HRM reports are met
*assets (both cash and data) are safeguarded from loss or theft
*HRM/PR cycle activities are performed efficiently and effectively

HRM and PR General Threats

*Inaccurate or invalid master data
*Unauthorized disclosure of sensitive information
*Loss or destruction of data
*Hiring unqualified or larcenous employees
*Violations of employment laws

HRM and PR General Controls

*Data processing integrity controls
*Restriction of access to master data
*Review of all changes to master data
*Access controls
*Encryption
*Backup and disaster recovery procedures
*Sound hiring procedures, including verification of job applicants' credentials, skills, references, and employment history
*Criminal background investigation checks of all applicants for finance-related positions
*Thorough documentation of hiring, performance evaluation, and dismissal procedures

Update Master File Threats

*Unauthorized changes to payroll master data
*Inaccurate updating of payroll master data

Update Master File Controls

*Segregation of duties: HRM department updates master data, but only payroll department issues paychecks
*Access controls
*Data processing integrity controls
*Regular review of all changes to master payroll data

*Inaccurate time and attendance data
*How can increase the accuracy of data entry? (p444)

*Source data automation for data capture
*Biometric authentication
*Segregation of duties (reconciliation of job-time tickets to time cards)
*Supervisory review

errors in processing payroll

*Data processing integrity controls: batch totals, cross-footing of the payroll register, use of a payroll clearing account, and a zero-balance check
*Supervisory review of payroll register and other reports
*Issuing earnings statements to employees
*Review of IRS guidelines to ensure proper classification of workers as either employees or independent contractors
*What are some of the data processing integrity controls that can be utilized to mitigate processing errors (p448-9)

*Theft or fraudulent distribution of paychecks
*How does a payroll clearing account work and what is a zero-balance check (p449)
*Why use a separate payroll account to clear payroll checks (p450)
*What are some of the cash disbursement controls that can be applied to payroll (p450)

Disburse Payroll Controls

*Restriction of physical access to blank payroll checks and the check signature machine
*Restriction of access to the EFT system
*Prenumbering and periodically accounting for all payroll checks and review of all EFT direct deposit transactions
*Require proper supporting documentation for all paychecks
*Use of a separate checking account for payroll, maintained as an imprest fund
*Segregation of dutoes (cashier versus accounts payable; check distribution from hiring/ firing; independent reconciliation of the payroll checking account)
*Restriction of access to payroll master database
*Verification of identity of all employees receiving paychecks
*Re-depositing unclaimed paychecks and investigating cause

Disburse Taxes and Deduction Threats

*Failure to make required payments
*Untimely payments
*Inaccurate payments

Disburse Taxes and Deductions Controls

*Configuration of system to make required payments using current instructions from IRS (Publication Circular E)
*Processing integrity controls
*Supervisory review of reports
*Employee review of earnings statement
*How can a payroll service bureau benefit a company (p452)

Which of the following controls can minimize the threat of inaccurate time and attendance data?

Which document is used to track the time worked by office professionals such as?

Which of the following is not a general threat to the HRM payroll cycle?