Question 1

There are few inherent risk factors that directly affect the human resource management process and its related accounts for non-officers.

Accepted Answer

A) True 
 B)False  True

Question 2

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. A

Question 3

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. B

Question 4

Identify whether the following tests are substantive analytical procedures,tests of details of transactions,or tests of details of account balances.
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)Tests of details of transactions.
2)Te

Question 5

In the substantive audit procedures for payroll where the control risk is set at low,an auditor most likely would

Accepted Answer

A)  Verify that checks representing unclaimed wages are mailed. 
B)  Trace individual employee deductions to entity journal entries. 
C)  Observe entity employees during a payroll distribution. 
D)  Compare payroll costs with entity standards or budgets. 
A)  Verify that checks representing unclaimed wages are mailed. 
B)  Trace individual employee deductions to entity journal entries. 
C)  Observe entity employees during a payroll distribution. 
D)  Compare payroll costs with entity standards or budgets.

Question 6

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 7

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 cards 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 cards 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 8

Which of the following activities most likely would detect whether payroll data are accurately processed?

Accepted Answer

A)  Monitor authorized distribution of data control sheets. 
B)  Use test data to verify the accurate performance of payroll processing. 
C)  Examine source documents for approval by supervisors. 
D)  Segregate duties between approval of hardware and software specifications. 
A)  Monitor authorized distribution of data control sheets. 
B)  Use test data to verify the accurate performance of payroll processing. 
C)  Examine source documents for approval by supervisors. 
D)  Segregate duties between approval of hardware and software specifications.

Question 9

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.

Question 10

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.

Question 11

A substantive test of transactions to test the completeness assertion includes

Accepted Answer

A)  Tracing a sample of time cards to the payroll register. 
B)  Testing a sample of payroll checks for the presence of an authorized time card. 
C)  Testing postings to the payroll register for a sample of payroll checks. 
D)  Recomputing the accuracy of a sample of payroll checks. 
A)  Tracing a sample of time cards to the payroll register. 
B)  Testing a sample of payroll checks for the presence of an authorized time card. 
C)  Testing postings to the payroll register for a sample of payroll checks. 
D)  Recomputing the accuracy of a sample of payroll checks.

Question 12

Key segregations of duties in the human resource management process include all of the following except:

Accepted Answer

A)  The supervision function should be separate from the payroll-processing function. 
B)  The disbursement function should be separate from the supervision function. 
C)  The human resource function should be separate from setting salaries. 
D)  The payroll-processing function should be separate from the general ledger function. 
A)  The supervision function should be separate from the payroll-processing function. 
B)  The disbursement function should be separate from the supervision function. 
C)  The human resource function should be separate from setting salaries. 
D)  The payroll-processing function should be separate from the general ledger function.

Question 13

An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for

Accepted Answer

A)  Hiring subordinate payroll department employees. 
B)  Having custody over unclaimed paychecks. 
C)  Updating employee earnings records. 
D)  Applying pay rates to time tickets. 
A)  Hiring subordinate payroll department employees. 
B)  Having custody over unclaimed paychecks. 
C)  Updating employee earnings records. 
D)  Applying pay rates to time tickets.

Question 14

Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?

Accepted Answer

A)  There are significant unexplained variances between standard and actual labor cost. 
B)  Payroll checks are disbursed by the same employee each payday. 
C)  Employee time cards are approved by individual departmental supervisors. 
D)  A separate payroll bank account is maintained on an imprest basis. 
A)  There are significant unexplained variances between standard and actual labor cost. 
B)  Payroll checks are disbursed by the same employee each payday. 
C)  Employee time cards are approved by individual departmental supervisors. 
D)  A separate payroll bank account is maintained on an imprest basis.

Question 15

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions,an auditor most likely would inquire about and

Accepted Answer

A)  Observe the segregation of duties concerning human resource responsibilities and payroll disbursement. 
B)  Inspect evidence that all prenumbered payroll checks are accounted for. 
C)  Recompute the payroll deductions for employee fringe benefits. 
D)  Verify the preparation of the monthly payroll account bank reconciliation. 
A)  Observe the segregation of duties concerning human resource responsibilities and payroll disbursement. 
B)  Inspect evidence that all prenumbered payroll checks are accounted for. 
C)  Recompute the payroll deductions for employee fringe benefits. 
D)  Verify the preparation of the monthly payroll account bank reconciliation.

Question 16

An auditor most likely would extend substantive tests of payroll when

Accepted Answer

A)  Payroll is extensively audited by the state government. 
B)  Payroll expense is substantially higher than in the prior year due to company growth. 
C)  Overpayments are discovered in performing tests of details. 
D)  Employees complain to management about too much overtime. 
A)  Payroll is extensively audited by the state government. 
B)  Payroll expense is substantially higher than in the prior year due to company growth. 
C)  Overpayments are discovered in performing tests of details. 
D)  Employees complain to management about too much overtime.

Question 17

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Accepted Answer

A)  Reconciliation of work in process inventory with cost records. 
B)  Comparison of daily journal entries with the factory labor summary. 
C)  Comparison of period costs budgets and time cards. 
D)  Reconciliation of the unfinished job summary and production cost records. 
A)  Reconciliation of work in process inventory with cost records. 
B)  Comparison of daily journal entries with the factory labor summary. 
C)  Comparison of period costs budgets and time cards. 
D)  Reconciliation of the unfinished job summary and production cost records.

Question 18

Inherent risk associated with officer compensation is frequently set high because officers have motive and opportunity to take advantage of their high-ranking offices in the form of excessive compensation.

Accepted Answer

A) True 
 B)False

Question 19

An auditor vouched data for a sample of employees in a payroll register to approved clock card/time sheet data to provide assurance that

Accepted Answer

A)  Payments to employees are computed at authorized rates. 
B)  Employees worked the number of hours for which they are paid. 
C)  Segregation of duties exist between the preparation and distribution of the payroll. 
D)  Internal controls relating to unclaimed payroll checks are operating effectively. 
A)  Payments to employees are computed at authorized rates. 
B)  Employees worked the number of hours for which they are paid. 
C)  Segregation of duties exist between the preparation and distribution of the payroll. 
D)  Internal controls relating to unclaimed payroll checks are operating effectively.

Question 20

In testing the payroll of a large company,the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review.What will be the best source to determine this?

Accepted Answer

A)  Telephone contacts with the employees. 
B)  Tracing from the payroll register to the employee's earnings records. 
C)  Confirmation with the union or other independent organization. 
D)  Examination of Human Resource Department records. 
A)  Telephone contacts with the employees. 
B)  Tracing from the payroll register to the employee's earnings records. 
C)  Confirmation with the union or other independent organization. 
D)  Examination of Human Resource Department records.

There are few inherent risk factors that directly affect the human resource management process and its related accounts for non-officers.

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

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

In the substantive audit procedures for payroll where the control risk is set at low,an auditor most likely would

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

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

Which of the following activities most likely would detect whether payroll data are accurately processed?

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

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

A substantive test of transactions to test the completeness assertion includes

Key segregations of duties in the human resource management process include all of the following except:

An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for

Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions,an auditor most likely would inquire about and

An auditor most likely would extend substantive tests of payroll when

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Inherent risk associated with officer compensation is frequently set high because officers have motive and opportunity to take advantage of their high-ranking offices in the form of excessive compensation.

An auditor vouched data for a sample of employees in a payroll register to approved clock card/time sheet data to provide assurance that

In testing the payroll of a large company,the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review.What will be the best source to determine this?

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

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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

There are few inherent risk factors that directly affect the human resource management process and its related accounts for non-officers.

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

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

In the substantive audit procedures for payroll where the control risk is set at low,an auditor most likely would

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

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

Which of the following activities most likely would detect whether payroll data are accurately processed?

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

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

A substantive test of transactions to test the completeness assertion includes

Key segregations of duties in the human resource management process include all of the following except:

An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for

Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?

In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions,an auditor most likely would inquire about and

An auditor most likely would extend substantive tests of payroll when

Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead?

Inherent risk associated with officer compensation is frequently set high because officers have motive and opportunity to take advantage of their high-ranking offices in the form of excessive compensation.

An auditor vouched data for a sample of employees in a payroll register to approved clock card/time sheet data to provide assurance that

In testing the payroll of a large company,the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review.What will be the best source to determine this?

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

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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