Question 1

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 2

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Accepted Answer

A)   Occurrence.
B)   Completeness.
C)   Authorization.
D)   Cutoff.AICPA: BB IndustryAICPA: FN MeasurementAccessibility: Keyboard Navigation

Question 3

Which of the following could test the occurrence 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 4

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Accepted Answer

A)   Examine personnel records for accuracy and completeness.
B)   Examine employees' names listed on payroll accounting records.
C)   Make a surprise observation of the company's regular distribution of paychecks.
D)   Visit the working areas and confirm with employees their badge or identification numbers.

Question 5

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 6

Vouching selected items from the payroll register to employee time sheets that have been approved by supervisory personnel provides evidence that

Accepted Answer

A)   internal controls relating to payroll disbursements were operating effectively.
B)   payroll checks were signed by an appropriate officer independent of the payroll preparation process.
C)   only bona fide employees worked and their pay was properly computed.
D)   employees worked the number of hours for which their pay was computed.AICPA: BB IndustryAICPA: FN MeasurementAccessibility: Keyboard Navigation

Question 7

When an auditor sets control risk low,sufficient evidence can be obtained for most payroll accounts through an understanding of internal controls,substantive analytical procedures,and tests of details of transactions.However,there are several accounts in the payroll cycle that may require more attention.Name the accounts and explain why the additional testing is necessary.

Accepted Answer

The accounts that need additional testin...

Question 8

Proper segregation of duties is critical for the human resource management process.

Accepted Answer

A) True 
 B)False

Question 9

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 10

A CPA reviews an entity's payroll procedures.The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for

Accepted Answer

A)   distributing payroll checks to employees.
B)   reviewing and approving time reports for subordinate employees.
C)   hiring subordinate employees.
D)   initiating requests for salary adjustments for subordinate employees.

Question 11

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

Accepted Answer

A)   Human resource.
B)   Treasurer.
C)   Controller.
D)   Payroll.

Question 12

All of the following are incorporated into valuation models except:

Accepted Answer

A)   the exercise price of the option.
B)   the term of the option.
C)   expected dividends.
D)   current tax rates.AICPA: BB IndustryAICPA: FN MeasurementAccessibility: Keyboard Navigation

Question 13

Which of the following could test the assertion of classification 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 reporting as short- or long-term.

Question 14

Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?

Accepted Answer

A)   Timecards should be carefully inspected by those persons who distribute pay envelopes to the employees.
B)   One person should be responsible for maintaining records of employee time for which salary payment is not to be made.
C)   Daily reports showing time charged to jobs should be approved by the foreman and compared to the total hours worked on the employee timecards.
D)   Internal auditors should make observations of distribution of paychecks on a surprise basis.

Question 15

The human resource function is responsible for managing the personnel needs of the organization.

Accepted Answer

A) True 
 B)False

Question 16

Employees must complete a W-4 form to authorize insurance deductions from his or her pay.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Which of the following internal control objectives is likely to be a larger concern in the audit of the payroll cycle?

Accepted Answer

A)   Payroll transactions are properly disclosed.
B)   Recorded payroll transactions are valid.
C)   Payroll transactions are recorded in the appropriate time period.
D)   All payroll transactions have been recorded.

Question 19

When control risk is assessed as low for assertions related to payroll,substantive tests of payroll balances most likely would be limited to applying substantive analytical procedures and

Accepted Answer

A)   observing the distribution of paychecks.
B)   footing and crossfooting the payroll register.
C)   inspecting payroll tax returns.
D)   recalculating payroll accruals.AICPA: BB IndustryAICPA: FN Risk AnalysisAccessibility: Keyboard Navigation

Question 20

Effective internal control over unclaimed payroll checks that are kept by the Treasury Department would include Accounting Department procedures that require

Accepted Answer

A)   effective cancellation and stop payment orders for checks representing unclaimed wages.
B)   redepositing unclaimed wages after a period of 3 months.
C)   accounting for all unclaimed wages in a current liability account.
D)   periodic accounting for the actual checks representing unclaimed wages.

Exam 12: Auditing the Human Resource Management Process

Proper segregation of duties is critical for the human resource management process.

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

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Correct Answer
verified

Effective internal control over unclaimed payroll checks that are kept by the Treasury Department would include Accounting Department procedures that require

Correct Answer
verified

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Correct Answer
verified

Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?

Correct Answer
verified

The human resource function is responsible for managing the personnel needs of the organization.

Correct Answer
verified

Which of the following internal control objectives is likely to be a larger concern in the audit of the payroll cycle?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

All of the following are incorporated into valuation models except:

Correct Answer
verified

When control risk is assessed as low for assertions related to payroll,substantive tests of payroll balances most likely would be limited to applying substantive analytical procedures and

Correct Answer
verified

Vouching selected items from the payroll register to employee time sheets that have been approved by supervisory personnel provides evidence that

Correct Answer
verified

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

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

Correct Answer
verified
The accounts that need additional testin...
View Answer

A CPA reviews an entity's payroll procedures.The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for

Correct Answer
verified

An auditor most likely would extend substantive tests of payroll when

Correct Answer
verified

Employees must complete a W-4 form to authorize insurance deductions from his or her pay.

Correct Answer
verified

Exam 12: Auditing the Human Resource Management Process

Proper segregation of duties is critical for the human resource management process.

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

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Correct AnswerverifiedShow Answer

Effective internal control over unclaimed payroll checks that are kept by the Treasury Department would include Accounting Department procedures that require

Correct AnswerverifiedShow Answer

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Correct AnswerverifiedShow Answer

Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?

Correct AnswerverifiedShow Answer

The human resource function is responsible for managing the personnel needs of the organization.

Correct AnswerverifiedShow Answer

Which of the following internal control objectives is likely to be a larger concern in the audit of the payroll cycle?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All of the following are incorporated into valuation models except:

Correct AnswerverifiedShow Answer

When control risk is assessed as low for assertions related to payroll,substantive tests of payroll balances most likely would be limited to applying substantive analytical procedures and

Correct AnswerverifiedShow Answer

Vouching selected items from the payroll register to employee time sheets that have been approved by supervisory personnel provides evidence that

Correct AnswerverifiedShow Answer

Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?

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

Correct AnswerverifiedThe accounts that need additional testin...View AnswerShow Answer

A CPA reviews an entity's payroll procedures.The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for

Correct AnswerverifiedShow Answer

An auditor most likely would extend substantive tests of payroll when

Correct AnswerverifiedShow Answer

Employees must complete a W-4 form to authorize insurance deductions from his or her pay.

Correct AnswerverifiedShow Answer

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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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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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The accounts that need additional testin...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified