EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Chapter 20, Problem 6RQ
To determine
Comment on the auditor’s view based on the stated statement.
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Students have asked these similar questions
The staffing service cycle of a company involves events and activities related to the compensation of executives and employees. Types of compensation for salaries, hourly wages and incentives, commissions, bonus options and employee benefits (eg health and vacation insurance). Auditors lack tests as completeness of the payroll cycle because most employees immediately follow up on their employers for inability to pay. However, the lack of payroll (availability or occurrence is a major focus of concern for auditors. There are several questions that you must answer, related to the audit process in the staffing service cycle, as follows:
A. Describe how an audience member developed a preliminary audit strategy in the staffing service cycle?
b. What are the five preliminary tests that can be done for the staffing service cycle and state the purpose of each test?
c. Which of these second audit procedures is usually more important in the auditing of personnel services, explain the reasons?…
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.
Judy Bell, CPA is an independent auditor for a company called Best Products Incorporated. The management of Best Products has asked Judy if she could provide assistance with payroll processing. Judy has accepted this payroll process job and also wants to remain the auditor.
Can Judy bell, CPA remain the auditor of Best Products incorporated and perform this nonattest service?
If so is there anything that Judy Bell, CPA must consider when accepting and performing his service?
Does it matter if Judy Bell, CPA wants to perform this nonattest service of payroll processing while serving as the auditor for a public company or private company?
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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Similar questions
- If a client uses ADP, a service center, for processing payroll, None of these. auditing standards require the auditor to test ADP’s controls since the service center application involves processing significant financial data. the auditor can assume that the controls are adequate because it is an independent enterprise. and the user auditor decides to rely on ADP’s auditor's report, the user auditor must make reference to the report of the service auditor in the opinion on the user organization's financial statements.arrow_forwardMike and his supervisor Claire are having a conversation one morning about one of their current audit clients internal controls over the payroll. Mike mentions to Claire that he has considered conducting a walkthrough of the client's payroll system but isn't exactly sure what documentation he might collect to support his walk through. Which of the following represent appropriate recommendations by Claire with respect to documentation Mike could collect? Select all that apply: 1. Mike should consider collecting source documents to support payroll transactions such as bills of lading 2. Mike should consider selecting and reviewing a sample of employee time cards for hourly employees, to verify hours worked 3. Mike could think about selecting a sample of payroll authorizations to ensure only authorized new employees are added to the payroll 4. Mike could examine payroll tax retums for the client, to ensure that employees are currently remitting federal, state, and local taxes to the…arrow_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_forwardPayroll Processed by a Service Organization. Assume that you are the audit senior conducting a review of a new client’s payroll system. In the process of interviewing the payroll department manager, she makes the following statement: “We don’t need many controls because our payroll is done outside the company by Automated Information Processing, a service bureau.”Required:Evaluate the payroll department manager’s statement and describe how a service organization affects an auditor’s review of controls.arrow_forwardOakley is the CFO for Parsons Project Management. They have been notified of an impending audit of all accounting records. What is Oakley's role in the audit? A. They are required to be absent during the audit to avoid influencing the results.B. They must agree to serve on the audit staff for other companies.C. They must be available to answer questions and grant access to payroll records.D. They must prevent privacy breaches by disallowing access to payroll records.arrow_forward
- What are the most frequent mistakes and scams that occur in the payroll and personnel processes?? In order to avoid or discover these blunders and scams, what are auditors searching for?arrow_forwardEnnis Locatelli is a new payroll accountant at Avata Electronics. In his review of previous manual payroll records, he noted several errors that required the issuance of additional checks to employees for unpaid payroll amounts. What are Ennis’s options to avoid similar problems in the future?arrow_forwardAdvise the college on the weakness in its systems and procedures due to payroll fraud.arrow_forward
- Which of the following activities performed by a department supervisor most likely would help to prevent or detect a payroll fraud?a. Distributing paychecks directly to department employees.b. Setting the pay rate for departmental employees.c. Hiring employees and authorizing them to be added to payroll.d. Approving a summary of hours each employee worked during the pay period.arrow_forwardAn IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.arrow_forwardMost employees that choose to commit fraud against their employers feel justified in doing so. For example, if an employee gets demoted and has to take a pay cut or doesn't get a raise or bonus for a given year, that employee may feel justified in taking what is referred to "wages in kind." Wages in kind is where the employee creates his or her own wages. What might a company do to prevent an employee from taking "wages in kind?"arrow_forward
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