Exam 15: Audit of the Human Resources and Payroll Cycle

Which of the following controls prevents error and helps to ensure that only authorized wages are paid by the payroll service provider?

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

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?

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?

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

The WhirlyGig Factory Ltd. manufactures whirly gigs of many different sizes and types. The company employs 55 employees, all paid on an hourly basis. Employees fill in time sheets and hand them in every Monday to the payroll clerk, Pamela. For factory employees, the time sheet shows the hours worked by product job number, and indicates if the job has been completed. The payroll clerk tracks the hours worked by job. When a job is complete, she compares the totals to the estimate made by the owner, Faruq. A bonus is paid for actual hours paid less than the estimated amount. Every Wednesday, Pamela prepares the cheques and gives them to Faruq for signing. Pamela then staples the cheques to the payroll stubs. Pamela hands out the office cheques and gives the other cheques to the factory supervisor for distribution. Required: A) Identify control weaknesses and their impact, and provide recommendations for improvement. B) What is the impact of the control weaknesses upon your audit approach?

Payroll and personnel costs at ABC Manufacturing are a major expense. This means that improper allocation or misclassification of labour costs could result in

A wage rate form that also documents a change in job responsibility for one of the warehouse employees should be approved by

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

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

Otto decided to outsource the payroll function to Magna Plus. For the purpose of an assurance engagement, Magna is considered a

Even though the tests of controls are the most important part of testing payroll, many auditors spend little time in this area. In many audits, there is a minimal risk of material misstatements, even though payroll is frequently a significant part of total expenses. Explain the reasons the auditors have for justifying this position.

Which of the following describes the class of transactions associated with payroll?

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?

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

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

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

Discuss the two most common ways in which employees can defraud a company in the payroll area.

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

Otto decided to outsource the payroll function to Magna Plus. The controller of Otto should still