Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 20, Problem 17.3MCQ
To determine
Identify the reason for which an auditor carries out the reconciliation of payroll tax forms.
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In determining the effectiveness of an entity’s policies and procedures relating to the occurrence assertion for payroll transactions, auditors most likely would inquire about anda. Observe the separation of duties concerning personnel responsibilities and payrolldisbursement.b. Inspect evidence of accounting for prenumbered payroll checks.c. Recompute the payroll deductions for employee benefits.d. Verify the preparation of the monthly payroll account bank reconciliation
Evaluate the difficulties associated with preventing and detecting payroll fraud.
List the supporting documents and records the auditorwill examine in a typical payroll audit in which the primary objective is to detect fraud
Chapter 20 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 20 - Prob. 1RQCh. 20 - Prob. 2RQCh. 20 - Distinguish among a payroll master file, a W-2...Ch. 20 - Prob. 4RQCh. 20 - Prob. 5RQCh. 20 - Prob. 6RQCh. 20 - Prob. 7RQCh. 20 - Prob. 8RQCh. 20 - Prob. 9RQCh. 20 - Prob. 10RQ
Ch. 20 - Prob. 11RQCh. 20 - Prob. 12RQCh. 20 - Prob. 13RQCh. 20 - Prob. 14RQCh. 20 - Prob. 15RQCh. 20 - Prob. 16.1MCQCh. 20 - Prob. 16.2MCQCh. 20 - Prob. 16.3MCQCh. 20 - Prob. 17.1MCQCh. 20 - Prob. 17.2MCQCh. 20 - Prob. 17.3MCQCh. 20 - Prob. 18.1MCQCh. 20 - Prob. 18.2MCQCh. 20 - Prob. 18.3MCQCh. 20 - Prob. 19DQPCh. 20 - Prob. 20DQPCh. 20 - Prob. 21DQPCh. 20 - Prob. 22DQPCh. 20 - Prob. 23DQPCh. 20 - Prob. 24DQPCh. 20 - Prob. 25DQPCh. 20 - The following are various asset misappropriations...Ch. 20 - Archer Uniforms, Inc., is a distributor of...Ch. 20 - Prob. 28DQPCh. 20 - Prob. 29C
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Similar questions
- What is NOT an example of internal control procedures that help prevent payroll fraud? a.Outsource Payroll Administration b.Require mandatory vacations c.Make sure only one person handles payroll functions d.Conduct periodic unannounced auditsarrow_forwardWhich of the following activities most likely would be considered a weakness in an entity’s internal control over payroll?a. A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department’s payroll summary. b. Payroll checks are prepared by the accounts payable department and signed by the treasurer. c. The employee who distributes payroll check returns unclaimed payroll checks to the payroll department. d. The personnel department sends employees’ termination notices to the payroll department.arrow_forwardWhen a CPA knows that a tax client has skimmed cash receipts and not reported the incomein the federal income tax return but signs the return as a CPA who prepared the return, theCPA has violated which of the following AICPA rules of conduct?a. The Confidential Client Information Rule.b. The Integrity and Objectivity Rule.c. The Independence Rule.d. The Accounting Principles Rulearrow_forward
- The following are typical questions that might appear on an internal control questionnaire for payroll activities: 1. Is there adequate separation of duties between employees who maintain human resources records and employees who approve payroll disbursements? 2. Is there adequate separation of duties between personnel who maintain timekeeping or attendance records for employees and employees who distribute payroll checks? Assuming that the operating effectiveness of each of the above controls is found to be inadequate, describe how the auditors might alter their substantive procedures to compensate for the increased level of control risk.arrow_forwardFor the purpose of internal control, the same person who prepares payroll checks should also distribute them. True or False True Falsearrow_forwardThe following are typical questions that might appear on an internal control questionnaire for payroll activities: 1. Is there adequate separation of duties between employees who maintain human resources records and employees who approve payroll disbursements? 2. Is there adequate separation of duties between personnel who maintain timekeeping or attendance records for employees and employees who distribute payroll checks? Describe the manner in which each of the above controls might be tested.arrow_forward
- The following are typical questions that might appear on an internal control questionnaire for payroll activities: 1. Is there adequate separation of duties between employees who maintain human resources records and employees who approve payroll disbursements? 2. Is there adequate separation of duties between personnel who maintain timekeeping or attendance records for employees and employees who distribute payroll checks? Describe the purpose of each of the above controlsarrow_forwardWhat is the purpose of the following control procedures (i.e., what threats is it designed to mitigate)? i. Establishing a separate payroll checking account and funding it as an imprest account.arrow_forwarddescribe the substantive audit procedures you will perform on a) payroll transactions in the profit and loss accountarrow_forward
- Control risk is the risk that a material misstatement in an account will not be prevented or detected on a timely basis by the client’s internal controls. The best controlto prevent or detect fictitious payroll transactions is to(1) use and account for prenumbered payroll checks.(2) obtain authorization from human resources for hiring, pay rate, job status andtermination.(3) verify internally authorized pay rates, computations, and agreement with thepayroll register.(4) conduct periodic independent bank reconciliations of the payroll bank account.arrow_forwardAdvise the college on the weakness in its systems and procedures due to payroll fraud.arrow_forwardWhat documents does a perpetrator use to commit billing fraud? example? What are the three categories in payroll fraud? example?arrow_forward
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