EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Textbook Question
Chapter 20, Problem 26DQP
The following are various asset misappropriations involving the payroll and personnel cycle.
- 1. The payroll clerk increased his salary by $100 each pay period. After a few weeks, he also increased the hourly rate for his friend who works in the shipping department.
- 2. The payroll clerk submitted payroll information for a fictitious employee and had the funds directly deposited to a bank account that he controlled.
- 3. An employee adds 10 overtime hours that she did not work to her time record each pay period.
- 4. Two factory employees have an arrangement that one of them will take each Friday off, and the other employee will record their time worked so that the absent employee will be paid.
- 5. A supervisor does not notify human resources that an hourly employee has left the company. He continues to submit time records for the employee. The money is directly deposited in the former employee’s bank account, and he splits the amount paid with the supervisor.
Required
- a. For each misappropriation, indicate the transaction-related audit objective that was not met.
- b. Indicate one or more controls that would be most effective in preventing or detecting the misappropriation.
- c. Because the controller is concerned about fictitious employees, she has recommended a surprise payroll payoff. Which misappropriations would be detected by the surprise payroll payoff? How is the payoff done if employees do not receive payroll checks because payment is directly deposited into their bank accounts?
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The following misstatements are included in the accounting records of Westgate Manufacturing Company.
Each month, a fraudulent receiving report is submitted to accounting by an employee in the receiving department. A few days later, he sends Westgate an invoice for the quantity of goods ordered from a small company he owns and operates in the evening. A check is prepared, and the amount is paid when the receiving report and the vendor’s invoice are matched by the accounts payable clerk.
Telephone expense (account 2112) was unintentionally charged to repairs and maintenance (account 2121).
Required:
For each misstatement, identify the transaction-related audit objective that was not met.
For each misstatement, state a control that should have prevented it from occurring on a continuing basis.
For each misstatement, state a substantive audit procedure that could uncover it.
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Chapter 20 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
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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