Choice "C" is correct. Unclaimed payroll checks should be returned to an independent party for follow up. Returning such checks (assets) to the payroll department (recordkeeping) represents an inadequate segregation of duties.
Choice "b" is incorrect. It is acceptable for the accounting department to set up the transfer of funds into the payroll account, since the accounting department does not have access to the actual funds.
Choice "a" is incorrect. The treasurer's supervision is crucial in this choice, serving to separate the recordkeeping function (payroll department) from the custodial function (the treasurer).
Choice "d" is incorrect. It is an appropriate segregation of duties for the payroll department to prepare the checks, while the chief financial officer signs them. This separates the recordkeeping function from the custodial function.