Comprehensive and Detailed Explanation:
Internal controls are processes used to ensure accuracy, security, and compliance in payroll operations. Effective internal controls include:
Option B (Segregating job duties) → Prevents fraud by ensuring no one person has full control over payroll.
Option C (Rotating job duties) → Reduces fraud risk and enhances cross-training.
Option D (Restricting system access) → Protects sensitive payroll data.
Option A (Storing backup files on-site) is incorrect because internal control best practices recommend off-site or cloud backups to protect against data loss from disasters.
Reference:
Payroll.org - Payroll Internal Control Procedures
IRS - Best Practices for Payroll Security