AUD 2 - Chapter 13 Q's Flashcards
Which of the following would raise a red flag in the audit of payroll?
A. One person in the company is authorized to sign all payroll cheques.
B. The endorsement on a cancelled payroll cheque included the words “for deposit only” above the payee’s signature.
C. The endorsement on a cancelled payroll cheque included the signature of a supervisor below the signature of the payee.
D. A supervisor initialled the time card of an employee
Which of the following would raise a red flag in the audit of payroll?
C. The endorsement on a cancelled payroll cheque included the signature of a supervisor below the signature of the payee.
Selecting a sample of payroll summaries and vouching the details to time records is a procedure designed to test the control objective of A. Environment. B. Validity. C. Completeness. D. Classification
Selecting a sample of payroll summaries and vouching the details to time records is a procedure designed to test the control objective of
B. Validity.
To best ensure that employees are paid authorized rates, the auditor should trace wage rates from the A. Master files to payroll journal. B. Payroll journal to master files. C. Personnel files to master files. D. Cheque register to payroll journal
To best ensure that employees are paid authorized rates, the auditor should trace wage rates from the
C. Personnel files to master files.
Tracing selected items from the payroll register to approved, employee time cards provides evidence that
A. Internal controls relating to payroll disbursements were operating effectively.
B. Payroll cheques were signed by an appropriate officer independent of the payroll preparation process.
C. Only bona fide employees worked and their pay was properly computed.
D. Employees worked the number of hours for which their pay was computed
Tracing selected items from the payroll register to approved, employee time cards provides evidence that
D. Employees worked the number of hours for which their pay was computed
The sampling unit in a test of controls relating to the validity of payroll transactions is ordinarily a (an) A. Clock card or time ticket. B. Employee T-4 Form. C. Employee personnel record. D. Payroll register entry
The sampling unit in a test of controls relating to the validity of payroll transactions is ordinarily a (an)
D. Payroll register entry
Selecting a sample of time clock cards and examining them for evidence of approval by a supervisor then tracing the hours recorded to the payroll registers is a procedure designed to obtain evidence about the control objective(s) of A. Validity only. B. Authorization only. C. Completeness only. D. Authorization and completeness.
Selecting a sample of time clock cards and examining them for evidence of approval by a supervisor then tracing the hours recorded to the payroll registers is a procedure designed to obtain evidence about the control objective(s) of
D. Authorization and completeness.
Which of the following is not a major risk in the payroll cycle?
A. Paying fictitious employees.
B. Paying employees more than a market wage.
C. Overpayment for time or production
D. Incorrect accounting for costs and expenses
Which of the following is not a major risk in the payroll cycle?
B. Paying employees more than a market wage.
Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February a reasonably large debit balance remained in this account. The most likely reason for this is that
A. More labour cost had been assigned to the expense accounts than had been paid.
B. Some labour cost had not been properly classified in the expense accounts.
C. Some employees had not yet cashed their cheques.
D. Not enough cash had been transferred to the bank account.
Small Corporation uses a Wages Clearing Account for its payroll disbursements. At the end of February a reasonably large debit balance remained in this account. The most likely reason for this is that
B. Some labour cost had not been properly classified in the expense accounts.
In the area of payroll, which of the following procedures represents proper control over the custody of assets?
A. The supervisor receives a copy of the payroll register for a chance to approve the payroll after it is completed.
B. Individual paycheques are prepared.
C. Unclaimed payroll cheques are held in the office of the chief financial officer.
D. Signatures from employees are obtained for calculation of deductions
In the area of payroll, which of the following procedures represents proper control over the custody of assets?
C. Unclaimed payroll cheques are held in the office of the chief financial officer.
Which of the following departments is likely to approve changes in pay rates and deductions from employee salaries? A. Personnel. B. Treasurer. C. Controller. D. Payroll.
Which of the following departments is likely to approve changes in pay rates and deductions from employee salaries?
A. Personnel.
An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for
A. Examining authorization forms for new employees.
B. Authorizing payroll rate changes for all employees.
C. Comparing payroll registers with original batch transmittal data.
D. Hiring all subordinate payroll department employees.
An auditor is most likely to assess control risk at maximum if the payroll department supervisor is responsible for
B. Authorizing payroll rate changes for all employees.
The purpose of segregating the duties of hiring personnel and distributing payroll cheques is to separate the
A. Human resources function from the controllership function.
B. Administrative controls from the internal accounting controls.
C. Authorization of transactions from the custody of related assets.
D. Operational responsibility from the record keeping responsibility.
The purpose of segregating the duties of hiring personnel and distributing payroll cheques is to separate the
C. Authorization of transactions from the custody of related assets.
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?
A. Distributing paycheques.
B. Authorizing overtime hours.
C. Authorizing the addition or removal of employees from the payroll.
D. Collecting and retaining unclaimed paycheques
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?
C. Authorizing the addition or removal of employees from the payroll.
The following document is not included in the payroll cycle: A. Payroll Cheques B. Timekeeping records C. Termination notices D. Supplier invoices
The following document is not included in the payroll cycle:
D. Supplier invoices
If controls over production accounting are found to be strong, an auditor can plan to do less testing at year over:
A. The existence assertion of inventory.
B. The valuation assertion of inventory.
C. The completeness assertion of inventory.
D. The rights assertion over inventory
If controls over production accounting are found to be strong, an auditor can plan to do less testing at year over:
B. The valuation assertion of inventory.
