A is corrent because these custody functions should not be performed by the payroll department which is a recordkeeping function. Under proper internal control recordkeeping, custody, and authorization of transactions should be segregated.
B is incorrect because payroll, which serves a recordkeeping function, should not distribute paychecks and should not have custody of unclaimed payroll checks.
C is incorrect because payroll, which serves as a recordkeeping function, should not distribute paychecks.
D is incorrect because payroll, which serves a recordkeeping function, should not have custody of the unclaimed payroll checks.
