Question 1

In auditing the imprest payroll account,which of the following procedures will take the least amount of auditor time?

Accepted Answer

A) tests of controls 
B) risk analysis and obtaining an understanding of controls 
C) analytical procedures 
D) tests of details of balances 
A) tests of controls 
B) risk analysis and obtaining an understanding of controls 
C) analytical procedures 
D) tests of details of balances

Question 2

Which of the following internal controls helps ensure that recorded payroll payments are for work actually performed by existing employees?

Accepted Answer

A) procedures requiring the recording of transactions as soon as possible 
B) only valid employees from the computer data files are accepted for processing 
C) internal verification of payroll file contents 
D) independent preparation of payroll bank reconciliation 
A) procedures requiring the recording of transactions as soon as possible 
B) only valid employees from the computer data files are accepted for processing 
C) internal verification of payroll file contents 
D) independent preparation of payroll bank reconciliation

Question 3

Which of the following tests of controls would pertain to whether existing payroll transactions are recorded?

Accepted Answer

A) Compare cancelled cheques with payroll journal details. 
B) Compare cancelled cheques with payroll records. 
C) Foot the payroll journal and trace details to the general ledger. 
D) Conduct gap testing for a sequence of payroll cheques. 
A) Compare cancelled cheques with payroll journal details. 
B) Compare cancelled cheques with payroll records. 
C) Foot the payroll journal and trace details to the general ledger. 
D) Conduct gap testing for a sequence of payroll cheques.

Question 4

Which of the following type of test is most important for the audit of payroll?

Accepted Answer

A) internal control 
B) test of detail 
C) analytical review 
D) substantive test 
A) internal control 
B) test of detail 
C) analytical review 
D) substantive test

Question 5

Which of the following controls helps to prevent error with set up of access rights,and also helps to prevent unauthorized changes to the access rights?

Accepted Answer

A) independent comparison to check that they have been set up properly 
B) access rights forms that are signed by the user's manager 
C) tracking all accesses in an access log by user identification code 
D) using audit software to provide a list of who has accessed sensitive data 
A) independent comparison to check that they have been set up properly 
B) access rights forms that are signed by the user's manager 
C) tracking all accesses in an access log by user identification code 
D) using audit software to provide a list of who has accessed sensitive data

Question 6

An important consideration in evaluating the fairness of the amounts accrued for vacation pay,sick pay,and other benefits is the

Accepted Answer

A) consistent accrual of these liabilities relative to those of the preceding year. 
B) actual expense incurred for the prior period. 
C) amount expended to date in the current period. 
D) profitability of the client,which will enable these liabilities to be met. 
A) consistent accrual of these liabilities relative to those of the preceding year. 
B) actual expense incurred for the prior period. 
C) amount expended to date in the current period. 
D) profitability of the client,which will enable these liabilities to be met.

Question 7

"Recorded payroll transactions are for the amount of time actually worked and at the proper pay rate;withholdings are properly calculated" relates to which control objective?

Accepted Answer

A) authorization 
B) completeness 
C) existence 
D) accuracy 
A) authorization 
B) completeness 
C) existence 
D) accuracy

Question 8

Ricky recently changed jobs from payroll analyst to assistant regional manager of production.An employee at the production facility came to see Ricky and complained that he was not paid on the last payroll cheque for the overtime he had done.Ricky apologized for this mistake and logged into the payroll system to modify the next paycheque for the employee to ensure that he would be paid for the additional hours.Which of the following statements correctly applies to this scenario?

Accepted Answer

A) The company did not properly allocate access rights. 
B) The company did not properly complete the access rights approval form. 
C) The company did not properly check employee background when they hired Ricky. 
D) Ricky did not do anything wrong since the employee had worked the hours. 
A) The company did not properly allocate access rights. 
B) The company did not properly complete the access rights approval form. 
C) The company did not properly check employee background when they hired Ricky. 
D) Ricky did not do anything wrong since the employee had worked the hours.

Question 9

Because of the lack of available evidence,it is usually difficult for an auditor to discover if an employee records more time on his or her time card than they actually worked.One procedure is to reconcile the total hours

Accepted Answer

A) paid this period with a previous period. 
B) paid according to the payroll records with an independent record of the total hours worked,such as those maintained by production control. 
C) worked this period with a previous period. 
D) worked according to the summary payroll report with the total hours worked as recorded on the time card for the period. 
A) paid this period with a previous period. 
B) paid according to the payroll records with an independent record of the total hours worked,such as those maintained by production control. 
C) worked this period with a previous period. 
D) worked according to the summary payroll report with the total hours worked as recorded on the time card for the period.

Question 10

What are the risks of error or fraud in the human resources and payroll cycle?

Accepted Answer

The risks of error or fraud in the human

Question 11

When labour is a material factor in inventory valuation,the auditor should place special emphasis on testing the internal controls concerning

Accepted Answer

A) proper classification of transactions. 
B) authorization of wage rates. 
C) fictitious employees. 
D) completeness of recorded transactions. 
A) proper classification of transactions. 
B) authorization of wage rates. 
C) fictitious employees. 
D) completeness of recorded transactions.

Question 12

Which of the following is a test of controls?

Accepted Answer

A) reviewing the payroll journal,general ledger,and payroll earnings records for large or unusual amounts 
B) examining time cards for indication of supervisor approval 
C) comparing cancelled cheques with payroll journal for name,amount,and date 
D) examining cancelled cheques for proper endorsement 
A) reviewing the payroll journal,general ledger,and payroll earnings records for large or unusual amounts 
B) examining time cards for indication of supervisor approval 
C) comparing cancelled cheques with payroll journal for name,amount,and date 
D) examining cancelled cheques for proper endorsement

Question 13

Which is the only one class of transaction relating to the payroll cycle?

Accepted Answer

A) receiving of goods 
B) obtaining of service 
C) receipt of cash 
D) sales 
A) receiving of goods 
B) obtaining of service 
C) receipt of cash 
D) sales

Question 14

Recomputing hours worked from time records provides evidence that

Accepted Answer

A) internal controls relating to payroll disbursements were operating effectively. 
B) payroll cheques 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. 
A) internal controls relating to payroll disbursements were operating effectively. 
B) payroll cheques 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.

Question 15

The human resources and payroll cycle is the transaction cycle that begins with

Accepted Answer

A) processing the payment to the employees. 
B) the creation of the employee profile in the payroll master file. 
C) the employee performing work for the company. 
D) the hiring of personnel. 
A) processing the payment to the employees. 
B) the creation of the employee profile in the payroll master file. 
C) the employee performing work for the company. 
D) the hiring of personnel.

Question 16

You have been working on the audit of Big Insurance Company for several years now.There are about 5000 employees working at the company in various positions.
Your audit partner has indicated that this year,the firm will be implementing computer-assisted audit techniques (CAATs),using generalized audit software.The information systems audit specialist will be assisting the audit team with the implementation of these tests.She wants you to provide a draft list of CAATs that could assist with the coming year's audit of payroll.
The company uses mainframe computing systems.Assume that the typical payroll information is available on computer files (i.e. ,employee number,employee name,social insurance number,department code,payment type code (salaried or hourly),time worked,wage rate,gross pay,deductions (by type),net pay,and cheque number).
Required:
Prepare a list of potential computer-assisted audit techniques that could be prepared for the payroll audit.Identify the audit objective to which they relate and indicate if any manual procedures are required to supplement the suggested CAAT.

Accepted Answer

Note:This is a sample of CAATs.Other tes

Question 17

Which of the following internal controls would assist in ensuring that recorded payroll transactions are for the amount of time actually worked and at the proper pay rate,and that withholdings are properly calculated?

Accepted Answer

A) comparison of batch totals with computer summary reports 
B) comparison of payroll master file with payroll general ledger totals 
C) adequate personnel files 
D) separation of duties between personnel,timekeeping,and payroll disbursements 
A) comparison of batch totals with computer summary reports 
B) comparison of payroll master file with payroll general ledger totals 
C) adequate personnel files 
D) separation of duties between personnel,timekeeping,and payroll disbursements

Question 18

When auditing the human resources and payroll cycle,the auditor should verify the officers' compensation because

Accepted Answer

A) officers are more likely to commit fraud. 
B) officers' compensation is likely more prone to error. 
C) some officers may have complex compensation packages. 
D) some officers may be in a position to pay themselves more than the authorized amounts. 
A) officers are more likely to commit fraud. 
B) officers' compensation is likely more prone to error. 
C) some officers may have complex compensation packages. 
D) some officers may be in a position to pay themselves more than the authorized amounts.

Question 19

List the common key controls for the human resources and payroll cycle.

Accepted Answer

The common key controls for the human re

Question 20

If there is an error in wage rates,such errors can typically escalate into material amounts.What characteristic of the human resources and payroll cycle causes this?

Accepted Answer

A) many repeated transactions 
B) the presence of independent verification 
C) the use of outsourcing organizations for payroll 
D) an error in the starting cheque number in a cheque run 
A) many repeated transactions 
B) the presence of independent verification 
C) the use of outsourcing organizations for payroll 
D) an error in the starting cheque number in a cheque run

In auditing the imprest payroll account,which of the following procedures will take the least amount of auditor time?

Which of the following internal controls helps ensure that recorded payroll payments are for work actually performed by existing employees?

Which of the following tests of controls would pertain to whether existing payroll transactions are recorded?

Which of the following type of test is most important for the audit of payroll?

Which of the following controls helps to prevent error with set up of access rights,and also helps to prevent unauthorized changes to the access rights?

An important consideration in evaluating the fairness of the amounts accrued for vacation pay,sick pay,and other benefits is the

"Recorded payroll transactions are for the amount of time actually worked and at the proper pay rate;withholdings are properly calculated" relates to which control objective?

Because of the lack of available evidence,it is usually difficult for an auditor to discover if an employee records more time on his or her time card than they actually worked.One procedure is to reconcile the total hours

What are the risks of error or fraud in the human resources and payroll cycle?

When labour is a material factor in inventory valuation,the auditor should place special emphasis on testing the internal controls concerning

Which of the following is a test of controls?

Which is the only one class of transaction relating to the payroll cycle?

Recomputing hours worked from time records provides evidence that

The human resources and payroll cycle is the transaction cycle that begins with

Which of the following internal controls would assist in ensuring that recorded payroll transactions are for the amount of time actually worked and at the proper pay rate,and that withholdings are properly calculated?

When auditing the human resources and payroll cycle,the auditor should verify the officers' compensation because

List the common key controls for the human resources and payroll cycle.

If there is an error in wage rates,such errors can typically escalate into material amounts.What characteristic of the human resources and payroll cycle causes this?

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

Exam 15: Audit of the Human Resources and Payroll Cycle

In auditing the imprest payroll account,which of the following procedures will take the least amount of auditor time?

Which of the following internal controls helps ensure that recorded payroll payments are for work actually performed by existing employees?

Which of the following tests of controls would pertain to whether existing payroll transactions are recorded?

Which of the following type of test is most important for the audit of payroll?

Which of the following controls helps to prevent error with set up of access rights,and also helps to prevent unauthorized changes to the access rights?

An important consideration in evaluating the fairness of the amounts accrued for vacation pay,sick pay,and other benefits is the

"Recorded payroll transactions are for the amount of time actually worked and at the proper pay rate;withholdings are properly calculated" relates to which control objective?

Because of the lack of available evidence,it is usually difficult for an auditor to discover if an employee records more time on his or her time card than they actually worked.One procedure is to reconcile the total hours

What are the risks of error or fraud in the human resources and payroll cycle?

When labour is a material factor in inventory valuation,the auditor should place special emphasis on testing the internal controls concerning

Which of the following is a test of controls?

Which is the only one class of transaction relating to the payroll cycle?

Recomputing hours worked from time records provides evidence that

The human resources and payroll cycle is the transaction cycle that begins with

Which of the following internal controls would assist in ensuring that recorded payroll transactions are for the amount of time actually worked and at the proper pay rate,and that withholdings are properly calculated?

When auditing the human resources and payroll cycle,the auditor should verify the officers' compensation because

List the common key controls for the human resources and payroll cycle.

If there is an error in wage rates,such errors can typically escalate into material amounts.What characteristic of the human resources and payroll cycle causes this?

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