Exam 15: Audit of the Human Resources and Payroll Cycle

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

The careful and timely preparation of all payroll withholdings and employer's portion of withholdings is necessary to avoid heavy fines. The most important control in the timely preparation of these returns is

Which of the following internal control tests would help to assess whether payroll transactions were properly classified?

You have been working on the audit of Ballistic Defence Company for several years now. There are about 15 000 employees working at the company in various positions. Recently, the company contracted for a new customized payroll system, which is to be implemented next month. You have been asked to assess the acceptance testing plan that is being prepared by accounting staff. In particular, they want you to help assess controls that will improve the accuracy of information entered into the new computer system. 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: Identify the tests that should be conducted by the company's accounting staff with respect to accuracy before accepting the software.

The correct cutoff and valuation of accrued salaries and wages

Which of the following controls could help to prevent unauthorized overtime?

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

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.

Recomputing hours worked from time records provides evidence that

The most important control in the payroll cycle is clear, proper documentation of the employees job responsibilities and wages by the appropriate level of authority. This control is associated with which audit objective?

Which of the following internal controls would help ensure that existing payroll transactions are recorded?

Which of the following is a substantive test of transactions?

Which of the following controls will help to detect unauthorized changes to payroll master files and help to detect whether terminated employees are still being paid?

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

To minimize the opportunity for fraud, unclaimed salary cheques should be

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.

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

To test whether the client has fulfilled its legal obligation in submitting payments for all payroll withholdings, the auditor must first

Verification of the legitimacy of year-end unpaid bonuses to officers and employees can be accomplished by comparing the recorded accrual to the amount

"Existing payroll transactions are recorded" is the control objective of