Question 1

"Recorded payroll payments are for work actually performed by existing employees" is the control objective of

Accepted Answer

A) authorization. 
B) completeness. 
C) occurrence. 
D) accuracy. 
A) authorization. 
B) completeness. 
C) occurrence. 
D) accuracy. C

Question 2

When the employees are paid automatically by bank deposits to the employees' accounts,in an effort to identify potential fraud,the auditor can look for

Accepted Answer

A) duplicated bank account numbers. 
B) duplicated names in the master payroll files. 
C) unusual employee names. 
D) cancelled cheques. 
A) duplicated bank account numbers. 
B) duplicated names in the master payroll files. 
C) unusual employee names. 
D) cancelled cheques. A

Question 3

The correct cutoff and valuation of accrued salaries and wages

Accepted Answer

A) is to calculate the exact hours of pay that were earned in the current period and paid in a subsequent period. 
B) is to compute an approximate proportion of the wages that were earned in the current period and use that amount as the accrual. 
C) allows the client to choose between A and B (above)each year. 
D) depends on company policy and whether it is consistently followed. 
A) is to calculate the exact hours of pay that were earned in the current period and paid in a subsequent period. 
B) is to compute an approximate proportion of the wages that were earned in the current period and use that amount as the accrual. 
C) allows the client to choose between A and B (above)each year. 
D) depends on company policy and whether it is consistently followed. D

Question 4

The human resources department would likely provide which of the following internal controls for the human resources and payroll cycle?

Accepted Answer

A) recalculation of net pay for every pay 
B) independent verification of wage rate 
C) account for the continuity of employee numbers 
D) account for the continuity of payroll check numbers 
A) recalculation of net pay for every pay 
B) independent verification of wage rate 
C) account for the continuity of employee numbers 
D) account for the continuity of payroll check numbers

Question 5

When examining payroll transactions,an auditor is primarily concerned with the possibility of

Accepted Answer

A) overpayments and unauthorized payments. 
B) posting of gross payroll amounts to incorrect salary expense accounts. 
C) misfootings of employee time records. 
D) excess withholding of amounts required to be withheld. 
A) overpayments and unauthorized payments. 
B) posting of gross payroll amounts to incorrect salary expense accounts. 
C) misfootings of employee time records. 
D) excess withholding of amounts required to be withheld.

Question 6

Once the auditor has determined the company's policy for accruing wages and knows it is consistent with that of previous years,the appropriate audit procedure to test for cutoff and accuracy is to

Accepted Answer

A) recalculate the client's accruals. 
B) compare the ledger balance with the journal and the T4 form. 
C) confirm the amount with employees. 
D) compare the recorded accrued wages with the amount approved in the minutes of the Board. 
A) recalculate the client's accruals. 
B) compare the ledger balance with the journal and the T4 form. 
C) confirm the amount with employees. 
D) compare the recorded accrued wages with the amount approved in the minutes of the Board.

Question 7

The auditor's primary concern in testing payroll liabilities is to make sure that

Accepted Answer

A) expense has not been overstated,thus reducing profits. 
B) there are no understated or omitted accruals. 
C) employees' T4 slips are accurate. 
D) salaries of officers have not been misclassified as wages. 
A) expense has not been overstated,thus reducing profits. 
B) there are no understated or omitted accruals. 
C) employees' T4 slips are accurate. 
D) salaries of officers have not been misclassified as wages.

Question 8

List examples of substantive test of details of balances for the accrued commission,accrued salaries and wages,and accrued bonuses accounts within the human resources and payroll cycle.

Accepted Answer

Examples of substantive test of details

Question 9

The auditor should review the preparation of at least one of each type of payroll tax form the client is responsible for filing,as a part of the auditor's responsibility for

Accepted Answer

A) understanding internal controls. 
B) doing tests of controls. 
C) doing analytical procedures. 
D) doing tests of balances. 
A) understanding internal controls. 
B) doing tests of controls. 
C) doing analytical procedures. 
D) doing tests of balances.

Question 10

A)There are several internal controls in the human resources and personnel function that are important from an audit perspective.For example,there should be an adequate investigation of the competence and trustworthiness of new employees.Discuss other internal controls in the personnel and employment function that are important from an audit perspective.B)There are several key internal controls over the timekeeping and payroll preparation function that should be present.For example,adequate control over the time on employees' time records includes the use of a time clock or other method of making certain that employees are paid for the number of hours they worked.Discuss other key internal controls over the timekeeping and payroll preparation function.C)There are several key internal controls over the payment of payroll function that should be present.For example,the payroll should be distributed by someone who is not involved in the other payroll functions.Discuss other key internal controls over the payment of payroll function.

Accepted Answer

A)From an audit perspective,the most imp

Question 11

Master file data is the semi-permanent data in an employee's file.Changes to the master file

Accepted Answer

A) should be adequately supported. 
B) should be checked by the originator. 
C) would be entered only once per month. 
D) would be implemented on an annual basis. 
A) should be adequately supported. 
B) should be checked by the originator. 
C) would be entered only once per month. 
D) would be implemented on an annual basis.

Question 12

Which of the following best describes proper internal control over payroll?

Accepted Answer

A) Preparation of the payroll must be under the control of the personnel department. 
B) Confidentiality of employee payroll data should be carefully protected to prevent fraud. 
C) Duties of hiring,payroll computation,and payment to employees should be segregated. 
D) Payment by cheque to employees should be replaced with payment by automatic deposits. 
A) Preparation of the payroll must be under the control of the personnel department. 
B) Confidentiality of employee payroll data should be carefully protected to prevent fraud. 
C) Duties of hiring,payroll computation,and payment to employees should be segregated. 
D) Payment by cheque to employees should be replaced with payment by automatic deposits.

Question 13

State the six functions that make up the human resources and payroll cycle and,for each function,identify the related documents and/or records that would be used by a company.

Accepted Answer

The six functions are:
1.Human resources

Question 14

As part of your audit of the payroll for Jones Chu Company Limited (JCC),you used generalized audit software.You had available to you the payroll transactions for the month of September and the employee master file as of September 30.You conducted the following tests,with results noted:
1.Ran a duplicates test on employee number in the transaction file.You found that one employee,employee #320,had been paid twice,using cheque numbers 12376 and 12377.
2.Checked the calculation of "pay per period" in the employee master file (divided the salary field by 12 to derive the monthly pay).It was found that for two employees these calculations did not match.Employee #20 had a pay of $200 higher than the calculation,while employee #220 had a pay that was $65 higher than the calculations.
3.Checked that "gross pay" less "unemployment insurance,Canada Pension Plan and income taxes deducted" equals "net pay." No errors were found.
Required:
For each audit test:
i)Describe the audit assertion associated with your audit test.
ii)Discuss the results that the auditor would have expected before running the test.
iii)Discuss the implications of the findings on the audit process or on specific audit procedures.

Accepted Answer

1.i)Duplicated employee number
ii)Assert

Question 15

Which of the following is an example of semi-permanent information that would be included in personnel records?

Accepted Answer

A) gross pay for the monthly pay issued in September 
B) net pay for the weekly pay issued in the first week of October 
C) category of job the person is employed in 
D) income tax deducted for the current pay 
A) gross pay for the monthly pay issued in September 
B) net pay for the weekly pay issued in the first week of October 
C) category of job the person is employed in 
D) income tax deducted for the current pay

Question 16

A weak internal control system allows a foreman to clock in daily for a fictitious employee and to approve the time card at the end of the payroll period.This fraud would be detected if other controls were in place,such as having an independent party

Accepted Answer

A) compare the date of the recorded cheque in the payroll journal with the date on the cancelled cheques and time cards. 
B) foot the payroll journal and trace postings to the general ledger and the payroll master file. 
C) recompute hours worked from time cards. 
D) distribute paycheques. 
A) compare the date of the recorded cheque in the payroll journal with the date on the cancelled cheques and time cards. 
B) foot the payroll journal and trace postings to the general ledger and the payroll master file. 
C) recompute hours worked from time cards. 
D) distribute paycheques.

Question 17

A)Discuss three important differences between the human resources and payroll cycle and other cycles in a typical audit.
B)Describe each of the six business functions in a typical human resources and payroll cycle.
C)Describe each of the primary documents and records used in the timekeeping and payroll preparation function in the payroll and personnel cycle.
D)Discuss each of the primary documents and records used in 1)the payment of payroll function,and 2)the preparation of employee withholdings and benefits remittance forms function in the payroll and personnel cycle.

Accepted Answer

A)Three important differences between th

Question 18

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the

Accepted Answer

A) payroll master file. 
B) payroll transaction file. 
C) payroll journal. 
D) job time ticket. 
A) payroll master file. 
B) payroll transaction file. 
C) payroll journal. 
D) job time ticket.

Question 19

Which of the following is not a major risk in the payroll cycle?

Accepted Answer

A) paying fictitious employees 
B) incorrect accounting of costs and expenses 
C) overpayment for time and production 
D) paying employees more than the market rate 
A) paying fictitious employees 
B) incorrect accounting of costs and expenses 
C) overpayment for time and production 
D) paying employees more than the market rate

Question 20

A form issued for each employee summarizing the earnings record for the calendar year is the

Accepted Answer

A) rate authorization form. 
B) summary payroll report. 
C) payroll master file. 
D) T4 form. 
A) rate authorization form. 
B) summary payroll report. 
C) payroll master file. 
D) T4 form.

"Recorded payroll payments are for work actually performed by existing employees" is the control objective of

When the employees are paid automatically by bank deposits to the employees' accounts,in an effort to identify potential fraud,the auditor can look for

The correct cutoff and valuation of accrued salaries and wages

The human resources department would likely provide which of the following internal controls for the human resources and payroll cycle?

When examining payroll transactions,an auditor is primarily concerned with the possibility of

Once the auditor has determined the company's policy for accruing wages and knows it is consistent with that of previous years,the appropriate audit procedure to test for cutoff and accuracy is to

The auditor's primary concern in testing payroll liabilities is to make sure that

List examples of substantive test of details of balances for the accrued commission,accrued salaries and wages,and accrued bonuses accounts within the human resources and payroll cycle.

The auditor should review the preparation of at least one of each type of payroll tax form the client is responsible for filing,as a part of the auditor's responsibility for

Master file data is the semi-permanent data in an employee's file.Changes to the master file

Which of the following best describes proper internal control over payroll?

State the six functions that make up the human resources and payroll cycle and,for each function,identify the related documents and/or records that would be used by a company.

Which of the following is an example of semi-permanent information that would be included in personnel records?

A weak internal control system allows a foreman to clock in daily for a fictitious employee and to approve the time card at the end of the payroll period.This fraud would be detected if other controls were in place,such as having an independent party

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the

Which of the following is not a major risk in the payroll cycle?

A form issued for each employee summarizing the earnings record for the calendar year is the

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

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Exam 15: Audit of the Human Resources and Payroll Cycle

"Recorded payroll payments are for work actually performed by existing employees" is the control objective of

When the employees are paid automatically by bank deposits to the employees' accounts,in an effort to identify potential fraud,the auditor can look for

The correct cutoff and valuation of accrued salaries and wages

The human resources department would likely provide which of the following internal controls for the human resources and payroll cycle?

When examining payroll transactions,an auditor is primarily concerned with the possibility of

Once the auditor has determined the company's policy for accruing wages and knows it is consistent with that of previous years,the appropriate audit procedure to test for cutoff and accuracy is to

The auditor's primary concern in testing payroll liabilities is to make sure that

List examples of substantive test of details of balances for the accrued commission,accrued salaries and wages,and accrued bonuses accounts within the human resources and payroll cycle.

The auditor should review the preparation of at least one of each type of payroll tax form the client is responsible for filing,as a part of the auditor's responsibility for

Master file data is the semi-permanent data in an employee's file.Changes to the master file

Which of the following best describes proper internal control over payroll?

State the six functions that make up the human resources and payroll cycle and,for each function,identify the related documents and/or records that would be used by a company.

Which of the following is an example of semi-permanent information that would be included in personnel records?

A weak internal control system allows a foreman to clock in daily for a fictitious employee and to approve the time card at the end of the payroll period.This fraud would be detected if other controls were in place,such as having an independent party

The file for recording each payroll transaction for each employee and maintaining total employee wages paid for the year to date is the

Which of the following is not a major risk in the payroll cycle?

A form issued for each employee summarizing the earnings record for the calendar year is the

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters