Question 1

What is one audit procedure that may be used to test for proper handling of terminated employees?

Accepted Answer

A procedure that tests for proper handli

Question 2

Which of the following best describes inherent risk for balance-related audit objectives as they relate to payroll?

Accepted Answer

A) Not considered 
B) Low 
C) Moderate 
D) High 
A) Not considered 
B) Low 
C) Moderate 
D) High

Question 3

Which of the following audit procedures would be the most effective in testing for nonexistent employees?

Accepted Answer

A) Trace transactions recorded in the payroll journal to the human resources department to determine employment status. 
B) Examine cancelled checks for proper endorsement. 
C) Recalculate net pay. 
D) Reconcile the disbursements in the payroll journal with the disbursements on the payroll bank statement. 
A) Trace transactions recorded in the payroll journal to the human resources department to determine employment status. 
B) Examine cancelled checks for proper endorsement. 
C) Recalculate net pay. 
D) Reconcile the disbursements in the payroll journal with the disbursements on the payroll bank statement.

Question 4

The audit procedure "recompute hours worked from time cards" is normally performed when testing the completeness objective for payroll.

Accepted Answer

A) True 
 B)False

Question 5

An auditor traces a sample of electronic time cards before and after the bi-weekly payroll report and then traces to the payroll master file to determine that payroll transactions are reported in the correct period.The auditor is gathering evidence for which audit objective?

Accepted Answer

A) Completeness 
B) Existence 
C) Cut-off 
D) Accuracy 
A) Completeness 
B) Existence 
C) Cut-off 
D) Accuracy

Question 6

Which of the following statements is false?

Accepted Answer

A) The payroll cycle consists of one class of transactions. 
B) Balance sheet accounts related to payroll are generally more significant than related transactions. 
C) Internal controls over payroll are effective for most companies. 
D) Small companies usually have effective controls over payroll. 
A) The payroll cycle consists of one class of transactions. 
B) Balance sheet accounts related to payroll are generally more significant than related transactions. 
C) Internal controls over payroll are effective for most companies. 
D) Small companies usually have effective controls over payroll.

Question 7

What events initiate and terminate the payroll and personnel cycle?

Accepted Answer

The hiring of an employee init

Question 8

Which of the following types of audit procedures is ordinarily emphasized the least when auditing payroll?

Accepted Answer

A) Tests of controls 
B) Tests of transactions 
C) Analytical procedures 
D) Tests of details of balances 
A) Tests of controls 
B) Tests of transactions 
C) Analytical procedures 
D) Tests of details of balances

Question 9

Auditors typically test details of account balances in the audit of payroll.

Accepted Answer

A) True 
 B)False

Question 10

Internal control over payroll is normally highly structured and well controlled.

Accepted Answer

A) True 
 B)False

Question 11

The job time ticket indicates the starting and stopping times of work during the pay period.

Accepted Answer

A) True 
 B)False

Question 12

What key separation of duties should the auditor expect to find within the payroll and personnel cycle?

Accepted Answer

The human resources department should be

Question 13

Auditors may extend their tests of payroll in which of the following circumstances?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 14

What types of audit procedures are typically emphasized during the audit of the payroll cycle?

Accepted Answer

Auditors typically e

Question 15

The payroll and personnel cycle ends with which of the following events?

Accepted Answer

A) Interviewing job candidates 
B) Hiring a new employee 
C) Existing employees submitting requests for payment for work performed 
D) Issuance of paychecks 
A) Interviewing job candidates 
B) Hiring a new employee 
C) Existing employees submitting requests for payment for work performed 
D) Issuance of paychecks

Question 16

Most companies, with the exception of small ones, have effective controls over the payroll cycle.

Accepted Answer

A) True 
 B)False

Question 17

The ________ has the responsibility for approving the number of hours worked for each employee.

Accepted Answer

A) employee's supervisor 
B) human resources department 
C) chief financial officer 
D) budgeting supervisor 
A) employee's supervisor 
B) human resources department 
C) chief financial officer 
D) budgeting supervisor

Question 18

In auditing payroll, which of the following procedures will normally require the least amount of auditor time under normal circumstances?

Accepted Answer

A) Tests of controls 
B) Substantive tests of transactions 
C) Analytical procedures 
D) Tests of details of balances 
A) Tests of controls 
B) Substantive tests of transactions 
C) Analytical procedures 
D) Tests of details of balances

Question 19

When examining payroll transactions, an auditor is primarily concerned with the possibility of:

Accepted Answer

A) incorrect summaries of employee time records. 
B) overpayments and unauthorized payments. 
C) under withholding of amounts required to be withheld. 
D) posting of gross payroll amounts to incorrect salary expense accounts. 
A) incorrect summaries of employee time records. 
B) overpayments and unauthorized payments. 
C) under withholding of amounts required to be withheld. 
D) posting of gross payroll amounts to incorrect salary expense accounts.

Question 20

Which department should be authorized to add and delete employees from the payroll or change pay rates and deductions?

Accepted Answer

A) The supervising department 
B) The accounting department 
C) The human resources department 
D) The treasurer's department 
A) The supervising department 
B) The accounting department 
C) The human resources department 
D) The treasurer's department

Exam 20: Audit of the Payroll and Personnel Cycle

What is one audit procedure that may be used to test for proper handling of terminated employees?

Which of the following best describes inherent risk for balance-related audit objectives as they relate to payroll?

Which of the following audit procedures would be the most effective in testing for nonexistent employees?

The audit procedure "recompute hours worked from time cards" is normally performed when testing the completeness objective for payroll.

An auditor traces a sample of electronic time cards before and after the bi-weekly payroll report and then traces to the payroll master file to determine that payroll transactions are reported in the correct period.The auditor is gathering evidence for which audit objective?

Which of the following statements is false?

What events initiate and terminate the payroll and personnel cycle?

Which of the following types of audit procedures is ordinarily emphasized the least when auditing payroll?

Auditors typically test details of account balances in the audit of payroll.

Internal control over payroll is normally highly structured and well controlled.

The job time ticket indicates the starting and stopping times of work during the pay period.

What key separation of duties should the auditor expect to find within the payroll and personnel cycle?

Auditors may extend their tests of payroll in which of the following circumstances?

What types of audit procedures are typically emphasized during the audit of the payroll cycle?

The payroll and personnel cycle ends with which of the following events?

Most companies, with the exception of small ones, have effective controls over the payroll cycle.

The ________ has the responsibility for approving the number of hours worked for each employee.

In auditing payroll, which of the following procedures will normally require the least amount of auditor time under normal circumstances?

When examining payroll transactions, an auditor is primarily concerned with the possibility of:

Which department should be authorized to add and delete employees from the payroll or change pay rates and deductions?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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