Question 1

A surprise payroll payoff in which employees must pick-up and sign for their pay check is one means of

Accepted Answer

A) identifying employees who do not have proper work credentials. 
B) establishing a tightly controlled,fraud-free work environment. 
C) testing for nonexistent employees. 
D) identifying employees who have not submitted proper W-2 forms. 
A) identifying employees who do not have proper work credentials. 
B) establishing a tightly controlled,fraud-free work environment. 
C) testing for nonexistent employees. 
D) identifying employees who have not submitted proper W-2 forms.

Question 2

Separation of duties in the payroll and personnel cycle will prevent overpayments,but not payments to nonexistent employees.

Accepted Answer

A) True 
 B)False

Question 3

The total of the individual employee earnings in the payroll master file should equal the total

Accepted Answer

A) balance of gross payroll in general ledger accounts. 
B) of the checks drawn to employees for payroll. 
C) gross payroll plus the total contributed by the employer for payroll taxes. 
D) gross pay for the current week's payroll. 
A) balance of gross payroll in general ledger accounts. 
B) of the checks drawn to employees for payroll. 
C) gross payroll plus the total contributed by the employer for payroll taxes. 
D) gross pay for the current week's payroll.

Question 4

Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.

Accepted Answer

Three important differences between the

Question 5

Discuss the two circumstances under which auditors would extend their procedures considerably in the audit of payroll.

Accepted Answer

Auditors often extend their procedures c

Question 6

While most cycles include at least two classes of transactions,the payroll and personnel cycle includes only one class of transactions.

Accepted Answer

A) True 
 B)False

Question 7

For good internal control,the payroll function should be independent of the human resources department.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) payroll transaction file. 
B) payroll master file. 
C) payroll bank account reconciliation. 
D) payroll tax returns. 
A) payroll transaction file. 
B) payroll master file. 
C) payroll bank account reconciliation. 
D) payroll tax returns.

Question 9

Once the auditor determines that the company's policy for accruing wages is consistent with prior years,the appropriate audit procedure to test for accuracy and cutoff is

Accepted Answer

A) recalculating the client's accrual. 
B) performing extensive tests of controls. 
C) performing extensive tests of details. 
D) none of the above. 
A) recalculating the client's accrual. 
B) performing extensive tests of controls. 
C) performing extensive tests of details. 
D) none of the above.

Question 10

When performing the tests of details of balances for expense accounts,________ is (are)generally not necessary.

Accepted Answer

A) extensive additional testing 
B) analytical procedures 
C) tests of controls 
D) substantive tests of transactions 
A) extensive additional testing 
B) analytical procedures 
C) tests of controls 
D) substantive tests of transactions

Question 11

What potential problems may arise when an auditor considers the relationship between payroll and inventory valuation?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

It is generally more difficult for the auditor to detect payment of fraudulent hours than payment of fictitious employees.

Accepted Answer

A) True 
 B)False

Question 13

The nature,extent,and timing of substantive tests of payroll transactions vary depending,in part,on assessed control risk.

Accepted Answer

A) True 
 B)False

Question 14

An auditor traces a sample of electronic time cards before and after the bi-weekly payroll report and then traces to the payroll master file to determine that payroll transactions are reported in the correct period.The auditor is gathering evidence for which audit objective?

Accepted Answer

A) completeness 
B) existence 
C) cut-off 
D) accuracy 
A) completeness 
B) existence 
C) cut-off 
D) accuracy

Question 15

Which of the following is a major balance-related audit objective in testing payroll liabilities?

Accepted Answer

A) Payroll tax expense is properly recorded. 
B) Transactions in the payroll and personnel cycle are recorded in the proper period. 
C) Accrual of salaries is the same as the amounts paid on the payroll tax returns. 
D) Time records are recorded by supervisors. 
A) Payroll tax expense is properly recorded. 
B) Transactions in the payroll and personnel cycle are recorded in the proper period. 
C) Accrual of salaries is the same as the amounts paid on the payroll tax returns. 
D) Time records are recorded by supervisors.

Question 16

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

Accepted Answer

A) redeposited. 
B) kept in the payroll department. 
C) left with the employee's supervisor. 
D) held for the employee in the personnel department. 
A) redeposited. 
B) kept in the payroll department. 
C) left with the employee's supervisor. 
D) held for the employee in the personnel department.

Question 17

In audits of companies in which payroll is a significant portion of inventory,the improper account classification of payroll can

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

Many audits have a ________ risk of misstatement for the payroll cycle.

Accepted Answer

A) high 
B) low 
C) moderate 
D) zero 
A) high 
B) low 
C) moderate 
D) zero

Question 19

Which of the following errors gives the auditor concern in auditing payroll transactions?

Accepted Answer

A) an error that indicates possible fraud 
B) computational errors in formulas when a computerized system is used 
C) classification errors in charging labor to inventory and job cost accounts 
D) Each of the above gives the auditor significant concern. 
A) an error that indicates possible fraud 
B) computational errors in formulas when a computerized system is used 
C) classification errors in charging labor to inventory and job cost accounts 
D) Each of the above gives the auditor significant concern.

Question 20

Match between columns
                        Premises: a form authorizing payroll deductions,including the number of exemptions for withholding of income taxes,retirement savings plans,and union dues
records including date of employment,personnel investigations,rates of pay,etc.
a document indicating the time the hourly employee started and stopped working
a form used to authorize the amount of pay
a file used for recording payroll transactions for each employee and maintaining total employee wages paid for the year to date
a form indicating which jobs an employee worked on during a given time period
forms submitted to local,state,and federal units of government for the payment of withheld taxes and the employer's tax

Accepted Answer

The Answer of payroll check and job time ticket and is...

Exam 20: Audit of the Payroll and Personnel Cycle

A surprise payroll payoff in which employees must pick-up and sign for their pay check is one means of

Separation of duties in the payroll and personnel cycle will prevent overpayments,but not payments to nonexistent employees.

The total of the individual employee earnings in the payroll master file should equal the total

Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.

Discuss the two circumstances under which auditors would extend their procedures considerably in the audit of payroll.

While most cycles include at least two classes of transactions,the payroll and personnel cycle includes only one class of transactions.

For good internal control,the payroll function should be independent of the human resources department.

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

Once the auditor determines that the company's policy for accruing wages is consistent with prior years,the appropriate audit procedure to test for accuracy and cutoff is

When performing the tests of details of balances for expense accounts,________ is (are)generally not necessary.

What potential problems may arise when an auditor considers the relationship between payroll and inventory valuation?

It is generally more difficult for the auditor to detect payment of fraudulent hours than payment of fictitious employees.

The nature,extent,and timing of substantive tests of payroll transactions vary depending,in part,on assessed control risk.

An auditor traces a sample of electronic time cards before and after the bi-weekly payroll report and then traces to the payroll master file to determine that payroll transactions are reported in the correct period.The auditor is gathering evidence for which audit objective?

Which of the following is a major balance-related audit objective in testing payroll liabilities?

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

In audits of companies in which payroll is a significant portion of inventory,the improper account classification of payroll can

Many audits have a ________ risk of misstatement for the payroll cycle.

Which of the following errors gives the auditor concern in auditing payroll transactions?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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