Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Key controls over payroll ensure what aspect of financial management?

1. Efficiency of cash flow

2. Documentation and authorisation of staff changes

3. Maximization of revenue generation

4. Compliance with marketing laws

The correct answer is: Documentation and authorisation of staff changes

The aspect of financial management that key controls over payroll ensure is the documentation and authorization of staff changes. This control is essential in maintaining the integrity of payroll processes. It involves having a systematic approach to document any changes related to employee status, such as hiring, terminations, promotions, or salary adjustments. Proper documentation and authorization help prevent errors and fraud, ensure that payroll reflects the true employment status of staff, and maintain accurate records for audit purposes. In the context of payroll management, establishing these controls ensures that only authorized personnel can make changes to payroll data, which contributes to overall financial accuracy and responsibility within an organization. By ensuring that modifications to employee records are properly documented and authorized, organizations can protect themselves from potential financial losses and legal ramifications associated with inaccurate payroll processing.