Reference no: EM133197488

An internal audit of Magnificent Machines Ltd's payroll function identified problems with how the company's dental assistance policy is currently applied. The dental policy sees the company pay up to $500 of its employees' dental fees (excluding cosmetic procedures) every financial year. However, the internal audit revealed that payroll officers are often uncertain of what dental procedures constitute cosmetic procedures and thus frequently authorise the reimbursement of dental fees relating to cosmetic procedures. Since Payroll Services already conducts an independent review for a sample of the overall dental assistance payments during each pay run as part of its four-eyes policy, the internal auditor proposed that in order to mitigate the risk of accidental reimbursements, all dental payments should be subject to an independent review by another payroll officer.

Required

Using the information provided in task 1 (general background information) and task 2 (additional information), critically evaluate whether the internal auditor's recommendation is the most effective way to mitigate the risk of accidental reimbursements or if a more suitable alternative internal control exists. In your argument, you should consider if there:

• Are potential weaknesses in the internal auditor's recommended control (identify and explain)

Is a more suitable alternative (identify and explain how it would better deal with the risk of accidental reimbursements).