Question 1

During the current year being audited, Hitech, Inc. changed from a conventional payroll punch clock to a computerized payroll time system. Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records. Because of this change:

Accepted Answer

A)  the auditor must audit through the computer.
B)  internal control has improved.
C)  without paper clock cards, part of the audit trail has been altered.
D)  the potential for payroll related fraud has been diminished.

Question 2

Which of the following could test the assertion of cutoff for payroll-related liabilities?

Accepted Answer

A)  Compare items in accrued payroll taxes to the supporting payroll tax return.
B)  Search for unrecorded liabilities.
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period.
D)  Review payroll liabilities for proper classification as short- or long-term.

Question 3

A surprise observation by an auditor of an entity's regular distribution of paychecks is primarily designed to satisfy the auditor that:

Accepted Answer

A)  all unclaimed payroll checks are properly returned to the cashier.
B)  the paymaster is not involved in the distribution of payroll checks.
C)  all employees have in their possession proper employee identification.
D)  names on the company payroll are those of bona fide employees presently on the job.

Question 4

Which of the following could test the existence assertion for payroll-related liabilities?

Accepted Answer

A)  Compare items in accrued payroll taxes to the supporting payroll tax return.
B)  Search for unrecorded liabilities.
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period.
D)  Review payroll liabilities for proper classification as short- or long-term.

Question 5

Listed below are descriptions of various types of documents used in the payroll process. Identify the document being described for each of the following:
1)The document used to record hours worked by an employee.
2)The document that summarizes all payroll payments issued to employees.
3)The document that contains information on an employee's work history.
4)The form used to authorize deductions from an employee's pay.
5)The computer file that contains all the entity's records related to payroll.

Accepted Answer

1)Time sheet.
2)Payr...

Question 6

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Accepted Answer

A)  Reconciliation of work in process inventory with cost records.
B)  Comparison of daily journal entries with the factory labor summary.
C)  Comparison of period costs budgets and time sheets.
D)  Reconciliation of the unfinished job summary and production cost records.

Question 7

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Accepted Answer

A)  The Human Resource department promptly sends employee termination notices to the payroll supervisor.
B)  Employees who distribute payroll checks forward unclaimed payroll checks to the absent employees' supervisors.
C)  Salary rates resulting from new hires are approved by the payroll supervisor.
D)  Total hours used for determination of gross pay are calculated by the payroll supervisor.

Question 8

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Accepted Answer

A)  Interview employees selected in a statistical sample of payroll transactions.
B)  Trace a sample of payroll checks to the master employee list.
C)  Confirm amounts withheld from employees' salaries with proper governmental authorities.
D)  Examine signatures on paid salary checks.

Question 9

An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for:

Accepted Answer

A)  hiring subordinate payroll department employees.
B)  having custody over unclaimed paychecks.
C)  updating employee earnings records.
D)  applying pay rates to time tickets.

Question 10

The payroll-processing function is responsible for paying employees for services and benefits.

Accepted Answer

A) True 
 B)False

Question 11

A large retail enterprise has established a policy that requires that the paymaster deliver all unclaimed payroll checks to the Internal Auditing Department at the end of each payroll distribution day. This policy was most likely adopted in order to:

Accepted Answer

A)  assure that employees who were absent on a payroll distribution day are not paid for that day.
B)  prevent the paymaster from cashing checks that are unclaimed for several weeks.
C)  prevent a bona fide employee's check from being claimed by another employee.
D)  detect any fictitious employee who may have been placed on the payroll.

Question 12

In performing tests concerning the granting of stock options, an auditor should:

Accepted Answer

A)  confirm the transaction with the Secretary of State in the state of incorporation.
B)  verify the existence of option holders in the entity's payroll records or stock ledgers.
C)  determine that sufficient treasury stock is available to cover any new stock issued.
D)  trace the authorization for the transaction to a vote of the board of directors.

Question 13

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Accepted Answer

A)  Classification.
B)  Occurrence.
C)  Cutoff.
D)  Valuation.

Question 14

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all:

Accepted Answer

A)  uncashed payroll checks were issued to employees who have not been terminated.
B)  personnel files are kept up to date.
C)  employees who have not been terminated receive their payroll checks.
D)  terminated employees are removed from the payroll.

Question 15

In testing the payroll of a large company, the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review. What will be the best source to determine this?

Accepted Answer

A)  Telephone contacts with the employees.
B)  Tracing from the payroll register to the employee's earnings records.
C)  Confirmation with the union or other independent organization.
D)  Examination of Human Resource Department records.

Question 16

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

Accepted Answer

A)  To ensure that names on the company payroll are those of bona fide employees presently on the job.
B)  Total payroll costs are a significant part of total operating costs.
C)  The auditor did not observe the distribution of the entire regular payroll during the audit in the prior year.
D)  Employee turnover is excessive.

Question 17

An auditor most likely would extend substantive tests of payroll when:

Accepted Answer

A)  payroll is extensively audited by the state government.
B)  payroll expense is substantially higher than in the prior year due to company growth.
C)  overpayments are discovered in performing tests of details.
D)  employees complain to management about too much overtime.

Question 18

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and:

Accepted Answer

A)  observe the segregation of duties concerning human resource responsibilities and payroll disbursement.
B)  inspect evidence that all prenumbered payroll checks are accounted for.
C)  recompute the payroll deductions for employee fringe benefits.
D)  verify the preparation of the monthly payroll account bank reconciliation.

Exam 12: Auditing the Human Resource Management Process

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

Correct Answer
verified

An auditor most likely would extend substantive tests of payroll when:

Correct Answer
verified

An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for:

Correct Answer
verified

A surprise observation by an auditor of an entity's regular distribution of paychecks is primarily designed to satisfy the auditor that:

Correct Answer
verified

The payroll-processing function is responsible for paying employees for services and benefits.

Correct Answer
verified

Correct Answer
verified
1)Time sheet.
2)Payr...
View Answer

During the current year being audited, Hitech, Inc. changed from a conventional payroll punch clock to a computerized payroll time system. Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records. Because of this change:

Correct Answer
verified

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Correct Answer
verified

Which of the following could test the existence assertion for payroll-related liabilities?

Correct Answer
verified

In performing tests concerning the granting of stock options, an auditor should:

Correct Answer
verified

A large retail enterprise has established a policy that requires that the paymaster deliver all unclaimed payroll checks to the Internal Auditing Department at the end of each payroll distribution day. This policy was most likely adopted in order to:

Correct Answer
verified

Which of the following could test the assertion of cutoff for payroll-related liabilities?

Correct Answer
verified

In testing the payroll of a large company, the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review. What will be the best source to determine this?

Correct Answer
verified

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all:

Correct Answer
verified

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Correct Answer
verified

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Correct Answer
verified

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and:

Correct Answer
verified

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Correct Answer
verified

Exam 12: Auditing the Human Resource Management Process

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

Correct AnswerverifiedShow Answer

An auditor most likely would extend substantive tests of payroll when:

Correct AnswerverifiedShow Answer

An auditor would consider internal control over an entity's payroll procedures to be ineffective if the payroll department supervisor is responsible for:

Correct AnswerverifiedShow Answer

A surprise observation by an auditor of an entity's regular distribution of paychecks is primarily designed to satisfy the auditor that:

Correct AnswerverifiedShow Answer

The payroll-processing function is responsible for paying employees for services and benefits.

Correct AnswerverifiedShow Answer

Correct Answerverified1)Time sheet.2)Payr...View AnswerShow Answer

During the current year being audited, Hitech, Inc. changed from a conventional payroll punch clock to a computerized payroll time system. Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records. Because of this change:

Correct AnswerverifiedShow Answer

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Correct AnswerverifiedShow Answer

Which of the following could test the existence assertion for payroll-related liabilities?

Correct AnswerverifiedShow Answer

In performing tests concerning the granting of stock options, an auditor should:

Correct AnswerverifiedShow Answer

A large retail enterprise has established a policy that requires that the paymaster deliver all unclaimed payroll checks to the Internal Auditing Department at the end of each payroll distribution day. This policy was most likely adopted in order to:

Correct AnswerverifiedShow Answer

Which of the following could test the assertion of cutoff for payroll-related liabilities?

Correct AnswerverifiedShow Answer

In testing the payroll of a large company, the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review. What will be the best source to determine this?

Correct AnswerverifiedShow Answer

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all:

Correct AnswerverifiedShow Answer

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Correct AnswerverifiedShow Answer

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Correct AnswerverifiedShow Answer

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and:

Correct AnswerverifiedShow Answer

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
1)Time sheet.
2)Payr...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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