ch 12 Flashcards
The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the
Authorization of transactions from the custody of related assets.
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
Observe the segregation of duties concerning personnel responsibilities and payroll disbursement.
Which of the following is a control procedure that most likely could help prevent employee payroll fraud?
The personnel department promptly sends employee termination notices to the payroll supervisor.
Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme?
There are significant uexplained variances between standard and actual labor costs.
Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries?
Personnel.
Which of the following procedures represents a weakness in internal controls for payroll?
The payroll clerk distributes signed payroll checks. Undistributed checks are returned to the payroll department.
Which of the following activities performed by a departmental supervisor most likely would help in the prevention or detection of a payroll fraud?
Approving a summary of hours each employee worked during the pay period.
An auditor most likely would not rely on controls if the payroll department supervisor is responsible for
Authorizing payroll rate changes for all employees.
An auditor most likely would extend substantive tests of payroll when
Over-payments are discovered in performing tests of details.
An auditor vouches data for a sample of employees in a payroll register to approved clock card data to provide assurance that
Employees work the number of hours for which they are paid.
When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying substantive analytical tests and
Recalculating payroll accruals.
An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to
Identify potential liabilities for unpaid payroll taxes.
Which of the following payroll control activities would most effectively ensure that payment is made for work performed?
Require employees to have their direct supervisors approve their time cards or other records of time worked.
