Exam 12: Auditing the Human Resource Management Process

Comparing amounts selected from the payroll account analysis for payroll accruals to supporting documentation would provide evidence primarily for which assertion?

Payroll-related expenses normally are not a material cost to the organization.

FASB ASC Topic 715 requires specific disclosures regarding human resources,which of course must be verified and audited by the CPA.What are those disclosures?

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.

Effective internal control over the payroll function would include which of the following?

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

The Hamster Stop has $93,650 in the Accrued Payroll account.Hamster's weekly payroll is $156,000 and the accrual represents payroll for 3 days.If controls are strong,determine whether additional audit work should be performed on this account.

Employees must complete a W-4 form to authorize insurance deductions from his or her pay.

A CPA reviews a client's payroll procedures.The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for

Vouching selected items from the payroll register to employee time cards that have been approved by supervisory personnel provides evidence that

When an auditor sets control risk low,sufficient evidence can be obtained for most payroll accounts through an understanding of internal controls,substantive analytical procedures,and tests of details of transactions.However,there are several accounts in the payroll cycle that may require more attention.Name the accounts and explain why the additional testing is necessary.

During the current year being audited,Hitech,Inc.changed from a conventional payroll punch clock to a computerized payroll time system.Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records.Because of this change

Possible misstatements related to the occurrence assertion for payroll transactions include all of the following except:

Give an example of a test of controls that could be used by an auditor to test for the following assertions: Occurrence,Accuracy,and Cutoff.

If the results of the control tests do not support the planned level of control risk,the detection risk will have to be set higher.

Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station?

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

In the weekly computer run to prepare payroll checks,a check was printed for an employee who had been terminated the previous week.Which of the following controls,if properly utilized,would have been most effective in preventing the error or ensuring its prompt detection?

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

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