AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
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Chapter 20, Problem 23DQP
a.
To determine
Identify that the
b.
To determine
Identify the audit objective that would satisfy the additional procedure recommended.
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The following are 11 audit procedures taken from an auditprogram:1. Foot the accounts payable trial balance and compare the total with the general ledger.2. Confirm accounts payable balances directly with vendors.3. Account for a sequence of checks in the cash disbursements journal to determinewhether any have been omitted.4. Examine vendors’ invoices to verify the ending balance in accounts payable.5. Compare the balance in payroll tax expense with previous years. The comparisontakes the increase in payroll tax rates into account.6. Examine the internal auditor’s initials on monthly bank reconciliations as anindication of whether they have been reviewed.7. Examine vendors’ invoices and other documentation in support of recorded transactions in the acquisitions journal.8. Multiply the commission rate by total sales and compare the result with commissionexpense.9. Examine vendors’ invoices and other supporting documents to determine whetherlarge amounts in the repair and maintenance…
Alyssa Ghose is auditing payroll accruals for a manufacturingcompany. The client has accrued payroll taxes, accrued vacation pay, and accrued bonusesfor salespersons as of the end of the fiscal year. Alyssa performed the following auditprocedures.1. Compared all accrual balances in the current year to the prior year and noted nosignificant fluctuations.2. Traced the subsequent payment of payroll taxes to the cash disbursements journaland the bank statement.3. Reviewed a sample of contracts with salespersons to verify the bonus formula.4. Reviewed cancelled checks for a sample of checks disbursed after year end for unusedvacation pay.a. Are the audit procedures performed by Alyssa sufficient to test accrued payroll tax,vacation pay, and bonuses? If not, what additional procedures should she perform?b. For each additional procedure you recommend in part a., identify the related auditobjective the procedure would satisfy.
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Chapter 20 Solutions
AUDITING+ASSURANCE 12MONTH ACCESS CARD
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 - Prob. 26DQPCh. 20 - Prob. 27DQPCh. 20 - Prob. 28C
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- Payroll Tests of Controls. The diagram in Exhibit 8C.22.1 describes several payroll tests of controls. It shows the direction of the tests, leading from samples of clock cards, payrolls, and cumulative year-to-date earnings records to blank squares.Required:For each blank square in Appendix Exhibit 8C.22.1, write a payroll test of controls procedure and describe the evidence it can produce.arrow_forwardIn 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 reconciliationarrow_forwardYou are the audit senior in charge of the audit of Malaika Company and have been informed by your audit manager that during the year a fraud occurred at the client. A payroll clerk set up fictitious employees and the wages were paid into the clerk’s own bank account. This clerk has subsequently left the company, but the audit manager is concerned that additional frauds have taken place in the wages department. Required: i) Describe six procedures which should be undertaken during the audit of wages as a result of the manager’s assessment of the increased risk of fraud.arrow_forward
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