SOLVED

11) When examining payroll transactions, an auditor is primarily concerned with the possibility of: A) incorrect summaries of employee time records. B) overpayments and unauthorized payments. C) under withholding of amounts required to be withheld. D) posting of gross payroll amounts to incorrect salary expense accounts. 12) For which of the following functions is the use of prenumbered documents least important? A) Use of prenumbered time cards in the payroll function. B) Use of prenumbered sales invoices in the sales function. C) Use of prenumbered receiving reports in the acquisitions function. D) Use of prenumbered deposit slips in the cash receipts function. 13) Which of the following audit procedures would be the most effective in testing for nonexistent employees? A) Trace transactions recorded in the payroll journal to the HR department to determine employment status. B) Examine cancelled checks for proper endorsement. C) Recalculate net pay . D) Reconcile the disbursements in the payroll journal with the disbursements on the payroll bank statements. 14) No individual with access to time cards, payroll records, or checks should also be permitted access to: A) the computer. B) job time tickets. C) personnel records. D) the canceled check file. 15) Many companies use outside payroll services to process payroll. Which of the following regarding the auditors responsibilities is most correct regarding their reliance on the internal controls of these outside payroll services? A) must B) cannot C) rarely D) can often 16) You are responsible for the audit of payroll. You have assessed control risk as low for the payroll transactions. Substantive tests of payroll would most likely be limited to analytical procedures and: A) tracing employee time records to the payroll transaction file. B) recomputing an entire payroll period and compare to the client’s records. C) tracing amounts in the payroll transaction file to the payroll master file. D) recalculating payroll accruals. 17) The careful and timely preparation of all payroll tax returns is necessary to avoid penalties and criminal charges. The most important control in the timely preparation of these returns is: A) computerized preparation of tax returns. B) a well-defined set of policies that indicate when each form must be filed. C) independent verification of computer output by a competent individual. D) a Gaant chart. 18) Which of the following types of audit tests is usually emphasized due to a lack of independent third-party evidence related to payroll transactions? A) Analytical procedures B) Tests of details of balances C) Tests of controls D) Each of the above is emphasized. 19) The most important means of verifying account balances in the payroll and personnel cycle are: A) tests of controls and substantive tests of transactions. B) analytical procedures and tests of controls. C) analytical procedures and substantive tests of transactions. D) tests of controls and tests of details of balances. 20) Audit tests of payroll are usually not extensive because: A) employees will likely complain if underpaid. payroll transactions are uniform and uncomplicated. payroll transactions are subject to audit by federal and state governments. Yes Yes Yes B) employees will likely complain if underpaid. payroll transactions are uniform and uncomplicated. payroll transactions are subject to audit by federal and state governments. No Yes No C) employees will likely complain if underpaid. payroll transactions are uniform and uncomplicated. payroll transactions are subject to audit by federal and state governments. No No Yes D) employees will likely complain if underpaid. payroll transactions are uniform and uncomplicated. payroll transactions are subject to audit by federal and state governments. Yes No No