Exam 20: Audit of the Payroll and Personnel Cycle

Auditors should determine whether the client has fulfilled its legal obligation in submitting payments of all payroll withholdings as part of their payroll tests.

The most important means of verifying account balances in the payroll and personnel cycle are

The auditor ________ rely on the internal controls of the payroll service organization if the service organization's auditor issues a report on the service organization's internal control.

On most audits, the calculation for payroll tax expense is costly and is not necessary unless analytical procedures indicate a problem that cannot be resolved through other procedures.

Which of the following statements about the payroll and personnel cycle is correct?

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

Imprest accounts usually carry a significant balance.

The primary purpose of a surprise payroll payoff is to detect employees who have reported more time than was actually worked (fraudulent hours).

Payroll checks should be distributed by someone independent of the payroll and timekeeping functions.

Which of the following is a substantive test of transactions?

The human resources department is considered to be an independent source for interviewing and hiring qualified personnel to work for a company.

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

Which of the following types of audit tests is usually emphasized due to a lack of independent third-party evidence related to payroll transactions?

In auditing payroll, the auditor wants to determine that the individuals included in her sample were employees of the company for the period under review. What is the auditor's best source of evidence?

Auditors seldom expect to find misstatements when testing payroll transactions.

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

Which of the following is a key control for the transaction-related audit objective of accuracy?

A key internal control which the auditor should determine if the client has procedures designed to identify key provisions in employment contracts, compensation, and bonus plans which may require financial statement disclosure.

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

Which of the following statements is false?