An organization discovered fraudulent activity involving the employee time-tracking system.

Fraud in time-tracking systems—such as "buddy punching" (where one employee clocks in/out for another)—is a common payroll fraud scheme. The most effective method to prevent this is biometric authentication, which ensures that only the actual employee can clock in or out.

(A) Face or finger recognition equipment. ✅

Correct. Biometric authentication (such as fingerprint or facial recognition) is the most effective solution because it uniquely identifies each individual, making it impossible for an employee to clock in on behalf of a colleague.

IIA GTAG "Managing and Auditing IT Vulnerabilities" recommends biometric authentication as a strong fraud prevention measure.

IIA Practice Guide "Fraud Prevention and Detection in an Automated Environment" highlights the use of biometrics for enhancing security in access control systems.

(B) Radio-frequency identification (RFID) chips to authenticate employees with cards.

Incorrect. RFID cards can be shared between employees, allowing fraud to continue. They are useful for access control but do not verify the identity of the person using the card.

(C) A requirement to clock in and clock out with a unique personal identification number (PIN).

Incorrect. PINs can be shared or stolen, making them ineffective in preventing buddy punching.

(D) A combination of a smart card and a password to clock in and clock out.

Incorrect. Like RFID and PIN systems, smart cards and passwords can be shared, making them ineffective against fraudulent time-tracking practices.

IIA GTAG – "Managing and Auditing IT Vulnerabilities"

IIA Practice Guide – "Fraud Prevention and Detection in an Automated Environment"

COSO Framework – Fraud Risk Management

Analysis of Answer Choices:IIA References:Thus, the correct answer is A, as biometric authentication directly verifies the employee’s identity, preventing time-tracking fraud.