Exam 16: Auditing the Production and

A common form of employee compensation for many companies involves the use of stock options. The auditor should determine all of the following except:

Payroll functions include all of the following except:

The request for a change in job classification or a wage rate increase is usually initiated by the:

When the weekly payroll edit run rejects an item, follow-up to see that the data is corrected and resubmitted is the responsibility of the:

It is customary to identify the major inventory categories in the balance sheet and the cost of goods sold in the income statement.

The use of the computer to compare production hours to direct labor hours on daily production reports relates to the:

The production cycle interfaces with the expenditure, personnel services, and revenue cycles.

The specific audit objective "factory labor is correctly classified as direct and indirect labor" is derived from the:

In automated systems, payroll is frequently processed using a batch approach.

Place an "X" in the applicable column for each substantive test to identify the assertions to which each test pertains.

List, by assertion category, the specific audit objectives for the personnel services cycle.

For each one of the following financial ratios, indicate the formula and identify the audit significance.

The test for terminated employees begins with the selection of termination notices.

The risk of underpayment in payroll is minimal because employees will complain when they are underpaid.

Observation of inventories is a required audit procedure whenever:

Printed outputs from the payroll computer run that are sent to data control include all of the following except:

Payroll fraud is not a major concern for the auditor.

When inventories are material and the auditor does not observe the inventory at or near the year-end, professional standards require the auditor to:

The Goren Company counts its inventory on October 31, 20X8. As a senior auditor assigned to the engagement, you observe the inventory count on this date. During the inventory observation, you encounter only minor problems, which are cleared up, to your satisfaction. On November 15, 20X8, the controller for the Goren Company informs you that the inventory summary sheets are complete and gives you a copy, part of which is reproduced here: Tag Number Description Quantity Price (\ ) Extended Value 2683 Metal clips, X104 768 \ 1.50 each \ 1,052 1888 Metal strips, 8" 1,264 feet 0.50 per foot 632 4822 Pipe, 852 feet 6.00 per yard 1,704 43 Heavy-duty clamps, No. 4 376 1.00 each 376 561 Heavy-duty pump, 178 4.50 each 801 2184 Metal struts, 6" 125 1.20 each 150 3421 Corner braces, No. 107 52 boxes 25.00 per box 1,300 1746 Rubber inner facing 26 dozen 15.00 each 4,680 During the inventory observation, you recorded the following inventory tag control information in your working papers: During the inventory observation, you recorded the following test counts in your working papers: REQUIRED: List the tag numbers identified above on your answer sheet. If you believe the information pertaining to the tag number is correct, so state. If you believe the information is incorrect, describe the error. The information you recorded during your test counts, of course, was $100 \%$ accurate.

Which of the following items should be sent by timekeeping to the payroll department?