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Which is the BEST control to detect ghost employees in an automated payroll system?
APeriodic data-analytic comparison of payroll master with HR master + active bank accounts
BReconciliation of total gross wages to GL
CApproval of overtime by the line manager
DYear-end Form 16 reconciliation
Answer & Solution
Correct answer: B. Reconciliation of total gross wages to GL
1. Ghost-employee fraud lives in payroll-master records not backed by HR-master entries.
2. A data-analytic cross-reference of payroll, HR, and bank-account masters surfaces orphans.
3. GL reconciliations confirm totals but not record validity.
_Source: ICAI BoS CA Final Paper 3, Ch 4 "Special Aspects of Auditing in an Automated Environment"_
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