ACCA · Question 06 · Audit and Assurance
CASE 2: AGRIGROW TECH LTD
AgriGrow Tech Ltd develops automated drone-based irrigation systems. They employ 500 seasonal workers during peak harvest. The payroll master file is updated by the HR clerk, who also processes the weekly payroll run. Seasonal workers are paid in cash. The warehouse manager orders drone parts, receives the goods, and authorizes the purchase invoices for payment. AgriGrow recently implemented a new cloud-based inventory system, but the IT manager left, leaving the system with no password complexity requirements.
QUESTION:
Which of the following best describes the internal control deficiency regarding the HR clerk's duties, and the potential consequence?
Answer options:
There is a lack of authorization; the clerk might process payroll late, resulting in unhappy seasonal workers.
There is a lack of segregation of duties; the clerk could create fictitious employees in the master file and process payments to themselves.
There is a lack of physical controls; the clerk has too much access to the cash used for paying workers.
There is a lack of arithmetic checks; the clerk might calculate the statutory deductions incorrectly.
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