Exam 13: Payroll and Production Processes

Reconciling the open production cost reports to the work-in-process inventory control account is a procedure designed to test the control objective of ________.

A bill of materials is associated with which duty?

Which of the following procedures carried out by the personnel department best reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Only supervisors have physical custody of materials,equipment,and labour while the production work is performed.

The purpose of segregating the duties of hiring personnel and distributing payroll cheques is to separate the ________.

Production accounting generates important information for management decisions but also is a source of audit risk because ________.

Describe the major risk areas associated with the payroll cycle.

In the area of payroll,which of the following procedures represents proper control over the custody of assets?

A test of the completeness objective is selecting a sample of payroll register entries and vouching them to employee data in the personnel files such as employee identification,rate of pay,and authorized deductions.

The five functional responsibilities for the payroll cycle are (1)personnel management (HR), (2)supervision, (3)timekeeping and cost accounting, (4)payroll accounting,and (5)payroll distribution.For each responsibility,identify the type of duty or duties (authorization,custody,record-keeping,periodic reconciliation)associated with the function and briefly describe the activity involved.

Tracing selected items from the payroll register to approved,employee time cards provides evidence that ________.

One procedure in an audit program for tests of controls reads: "Select a sample of payroll register entries and vouch employee identification numbers,pay rates,and authorized deductions to the personnel files." This procedure is designed to test the validity of payroll information for employees.

An advantage to outsourcing payroll processing is improved segregation of duties.

Which of the following would raise a red flag in the audit of payroll?

To best ensure that employees are paid authorized rates,the auditor should trace wage rates from the ________.

Cost accounting can be performed by those who also ________.

Most of the transactions in the production cycle are cost accounting allocations,unit cost determinations,and standard cost calculations.

Selecting a sample of production cost reports and vouching material costs to issue slips and materials-used reports,is a procedure designed to test the control objective of _________.

What is a clearing account? What are the risks associated with this type of account?

Finished goods inventory is low in inherent risk since production is so well understood.