Question 1

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all

Accepted Answer

A)  Uncashed payroll checks were issued to employees who have not been terminated. 
B)  Personnel files are kept up to date. 
C)  Employees who have not been terminated receive their payroll checks. 
D)  Terminated employees are removed from the payroll. 
A)  Uncashed payroll checks were issued to employees who have not been terminated. 
B)  Personnel files are kept up to date. 
C)  Employees who have not been terminated receive their payroll checks. 
D)  Terminated employees are removed from the payroll. D

Question 2

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Accepted Answer

A)  The Human Resource department promptly sends employee termination notices to the payroll supervisor. 
B)  Employees who distribute payroll checks forward unclaimed payroll checks to the absent employees' supervisors. 
C)  Salary rates resulting from new hires are approved by the payroll supervisor. 
D)  Total hours used for determination of gross pay are calculated by the payroll supervisor. 
A)  The Human Resource department promptly sends employee termination notices to the payroll supervisor. 
B)  Employees who distribute payroll checks forward unclaimed payroll checks to the absent employees' supervisors. 
C)  Salary rates resulting from new hires are approved by the payroll supervisor. 
D)  Total hours used for determination of gross pay are calculated by the payroll supervisor. A

Question 3

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Accepted Answer

A)  Examine personnel records for accuracy and completeness. 
B)  Examine employees' names listed on payroll accounting records. 
C)  Make a surprise observation of the company's regular distribution of paychecks. 
D)  Visit the working areas and confirm with employees their badge or identification numbers. 
A)  Examine personnel records for accuracy and completeness. 
B)  Examine employees' names listed on payroll accounting records. 
C)  Make a surprise observation of the company's regular distribution of paychecks. 
D)  Visit the working areas and confirm with employees their badge or identification numbers. C

Question 4

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Accepted Answer

A)  Occurrence. 
B)  Completeness. 
C)  Authorization. 
D)  Cutoff. 
A)  Occurrence. 
B)  Completeness. 
C)  Authorization. 
D)  Cutoff.

Question 5

Which of the following internal control activities most likely would prevent direct labor hours from being charged to manufacturing overhead?

Accepted Answer

A)  Periodic independent counts of work-in-process for comparison to recorded amounts. 
B)  Comparison of daily journal entries with approved production orders. 
C)  Use of time tickets to record actual labor worked on production orders. 
D)  Reconciliation of work-in-process inventory with periodic cost budgets. 
A)  Periodic independent counts of work-in-process for comparison to recorded amounts. 
B)  Comparison of daily journal entries with approved production orders. 
C)  Use of time tickets to record actual labor worked on production orders. 
D)  Reconciliation of work-in-process inventory with periodic cost budgets.

Question 6

Explain how the human resource management process can affect the financial statements.

Accepted Answer

The main human resource transaction that

Question 7

Proper segregation of duties is critical for the human resource management process.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following could test the occurrence assertion for payroll-related liabilities?

Accepted Answer

A)  Compare items in accrued payroll taxes to the supporting payroll tax return. 
B)  Search for unrecorded liabilities. 
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period. 
D)  Review payroll liabilities for proper classification as short- or long-term. 
A)  Compare items in accrued payroll taxes to the supporting payroll tax return. 
B)  Search for unrecorded liabilities. 
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period. 
D)  Review payroll liabilities for proper classification as short- or long-term.

Question 9

Transactions processed through the payroll process include all of the following except:

Accepted Answer

A)  Payments to employees for services rendered. 
B)  Payments to independent contractors for services rendered. 
C)  Accrual of social security taxes. 
D)  Payment of unemployment taxes. 
A)  Payments to employees for services rendered. 
B)  Payments to independent contractors for services rendered. 
C)  Accrual of social security taxes. 
D)  Payment of unemployment taxes.

Question 10

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Accepted Answer

A)  Classification. 
B)  Occurrence. 
C)  Cutoff. 
D)  Valuation. 
A)  Classification. 
B)  Occurrence. 
C)  Cutoff. 
D)  Valuation.

Question 11

Which of the following could test the assertion of cutoff for payroll-related liabilities?

Accepted Answer

A)  Compare items in accrued payroll taxes to the supporting payroll tax return. 
B)  Search for unrecorded liabilities. 
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period. 
D)  Review payroll liabilities for proper classification as short-or long-term. 
A)  Compare items in accrued payroll taxes to the supporting payroll tax return. 
B)  Search for unrecorded liabilities. 
C)  Examine payroll tax returns to determine that the expense was recorded in the proper period. 
D)  Review payroll liabilities for proper classification as short-or long-term.

Question 12

An effective system of internal control over the payroll function would include

Accepted Answer

A)  Verification of agreement of job time tickets with employee clock card hours by a payroll department employee. 
B)  Reconciliation of totals on job time tickets with job reports by employees responsible for those specific jobs. 
C)  Custody of rate authorization records by the supervisor of the payroll department. 
D)  Preparation of payroll transaction journal entries by an employee who reports to the supervisor of the human resource department. 
A)  Verification of agreement of job time tickets with employee clock card hours by a payroll department employee. 
B)  Reconciliation of totals on job time tickets with job reports by employees responsible for those specific jobs. 
C)  Custody of rate authorization records by the supervisor of the payroll department. 
D)  Preparation of payroll transaction journal entries by an employee who reports to the supervisor of the human resource department.

Question 13

When examining payroll transactions, an auditor is primarily concerned with the possibility of

Accepted Answer

A)  Underpayments and properly authorized payments. 
B)  Posting of gross payroll amounts to incorrect salary expense accounts. 
C)  Misfootings of employee time records. 
D)  Excess withholding of amounts required to be withheld. 
A)  Underpayments and properly authorized payments. 
B)  Posting of gross payroll amounts to incorrect salary expense accounts. 
C)  Misfootings of employee time records. 
D)  Excess withholding of amounts required to be withheld.

Question 14

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to separate the

Accepted Answer

A)  Duties within the accounting function. 
B)  Custody of assets from the accounting for those assets. 
C)  Authorization of transactions from the custody of related assets. 
D)  Operational responsibility from record keeping responsibility. 
A)  Duties within the accounting function. 
B)  Custody of assets from the accounting for those assets. 
C)  Authorization of transactions from the custody of related assets. 
D)  Operational responsibility from record keeping responsibility.

Question 15

The human resource function is responsible for managing the personnel needs of the organization.

Accepted Answer

A) True 
 B)False

Question 16

Listed below are descriptions of various types of documents used in the payroll process. Identify the document being described for each of the following
1) The document used to record hours worked by an employee.
2) The document that summarizes all payroll payments issued to employees.
3) The document that contains information on an employee's work history.
4) The form used to authorize deductions from an employee's pay.
5) The computer file that contains all the entity's records related to payroll.

Accepted Answer

1) Time sheet.
2) Pa

Question 17

For each of the following tests, identify the assertion to which the test applies.
1) Trace a sample of payroll checks to the master employee list to verify occurrence.
2) Recalculate the mathematical accuracy of a sample of payroll checks.
3) Test a sample of bank reconciliations for the payroll bank account.
4) Estimate sales commissions by applying commission formulas to recorded sales totals.
5) Compare amounts accrued to supporting documentation, such as payroll tax returns.
6) Compare payroll costs as a percentage of sales to industry data.

Accepted Answer

1) Occurrence.
2) Accuracy.
3)

Question 18

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Accepted Answer

A)  Interview employees selected in a statistical sample of payroll transactions. 
B)  Vouch number of hours worked as shown on payroll to time sheets and time reports signed by the foreman. 
C)  Confirm amounts withheld from employees' salaries with proper governmental authorities. 
D)  Examine signatures on paid salary checks. 
A)  Interview employees selected in a statistical sample of payroll transactions. 
B)  Vouch number of hours worked as shown on payroll to time sheets and time reports signed by the foreman. 
C)  Confirm amounts withheld from employees' salaries with proper governmental authorities. 
D)  Examine signatures on paid salary checks.

Question 19

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

Accepted Answer

A)  To ensure that names on the company payroll are those of bona fide employees presently on the job. 
B)  Total payroll costs are a significant part of total operating costs. 
C)  The auditor did not observe the distribution of the entire regular payroll during the audit in the prior year. 
D)  Employee turnover is excessive. 
A)  To ensure that names on the company payroll are those of bona fide employees presently on the job. 
B)  Total payroll costs are a significant part of total operating costs. 
C)  The auditor did not observe the distribution of the entire regular payroll during the audit in the prior year. 
D)  Employee turnover is excessive.

Question 20

The payroll-processing function is responsible for paying employees for services and benefits.

Accepted Answer

A) True 
 B)False

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Which of the following internal control activities most likely would prevent direct labor hours from being charged to manufacturing overhead?

Explain how the human resource management process can affect the financial statements.

Proper segregation of duties is critical for the human resource management process.

Which of the following could test the occurrence assertion for payroll-related liabilities?

Transactions processed through the payroll process include all of the following except:

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Which of the following could test the assertion of cutoff for payroll-related liabilities?

An effective system of internal control over the payroll function would include

When examining payroll transactions, an auditor is primarily concerned with the possibility of

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to separate the

The human resource function is responsible for managing the personnel needs of the organization.

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

The payroll-processing function is responsible for paying employees for services and benefits.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 12: Auditing the Human Resource Management Process

The proper use of prenumbered termination notice forms by the Payroll Department should provide assurance that all

Which of the following is a control activity that most likely could help prevent employee payroll fraud?

Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job?

Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for payroll expense?

Which of the following internal control activities most likely would prevent direct labor hours from being charged to manufacturing overhead?

Explain how the human resource management process can affect the financial statements.

Proper segregation of duties is critical for the human resource management process.

Which of the following could test the occurrence assertion for payroll-related liabilities?

Transactions processed through the payroll process include all of the following except:

Tracing a sample of time sheets before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion?

Which of the following could test the assertion of cutoff for payroll-related liabilities?

An effective system of internal control over the payroll function would include

When examining payroll transactions, an auditor is primarily concerned with the possibility of

The purpose of segregating the duties of distributing payroll checks and hiring personnel is to separate the

The human resource function is responsible for managing the personnel needs of the organization.

Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions?

Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?

The payroll-processing function is responsible for paying employees for services and benefits.

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters