Question 1

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

Accepted Answer

A) Distributing paychecks. 
B) Authorizing overtime hours. 
C) Authorizing the addition or deletion of employees from the payroll. 
D) Collecting and retaining unclaimed paychecks. 
A) Distributing paychecks. 
B) Authorizing overtime hours. 
C) Authorizing the addition or deletion of employees from the payroll. 
D) Collecting and retaining unclaimed paychecks.

Question 2

An entity's internal control structure requires for every check request that there be an approved voucher,supported by a prenumbered purchase order and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select items for testing from the population of all

Accepted Answer

A) Purchase orders. 
B) Canceled checks. 
C) Receiving reports. 
D) Approved vouchers. 
A) Purchase orders. 
B) Canceled checks. 
C) Receiving reports. 
D) Approved vouchers.

Question 3

R.Budd,the purchasing agent of Lake Hardware Wholesalers,has a relative who owns a retail hardware store.Budd arranged for hardware to be delivered by manufacturers to the retail store on a cash-on-delivery (COD)basis,thereby enabling his relative to buy at Lake's wholesale prices.Budd was probably able to accomplish this because of Lake's poor internal control over

Accepted Answer

A) Purchase requisitions. 
B) Cash receipts. 
C) Perpetual inventory records. 
D) Purchase orders. 
A) Purchase requisitions. 
B) Cash receipts. 
C) Perpetual inventory records. 
D) Purchase orders.

Question 4

The five functional responsibilities of a payroll cycle are ____________________________,____________________________,____________________________,and ________________________________.
Reference: Question also found in study guide

Accepted Answer

personnel; supervisi

Question 5

When auditing PP&E,the auditor's approach is generally to

Accepted Answer

A) Examine evidence supporting the amounts in the ending balance. 
B) Examine evidence supporting additions during the year. 
C) Follow a reliance strategy,testing internal controls and analytical procedures. 
D) Concentrate on finding unrecorded assets. 
A) Examine evidence supporting the amounts in the ending balance. 
B) Examine evidence supporting additions during the year. 
C) Follow a reliance strategy,testing internal controls and analytical procedures. 
D) Concentrate on finding unrecorded assets.

Question 6

If the risk of material misstatement is assessed as high,it is likely that additional substantive procedures will be required.

Accepted Answer

A) True 
 B)False

Question 7

Acquisition and expenditure activities include (1)purchasing goods and services,(2)receiving the goods or services,(3)recording the asset or expense and related liability,and (4)depreciating assets purchased.

Accepted Answer

A) True 
 B)False

Question 8

Purchases are requisitioned by a purchasing department that seeks the best prices and quality.

Accepted Answer

A) True 
 B)False

Question 9

Tracing a sample of time clock cards to payroll registers (journals)is a procedure designed to obtain evidence about the transaction assertion(s)of

Accepted Answer

A) Occurrence only. 
B) Occurrence and accuracy only. 
C) Completeness only. 
D) Accuracy only. 
A) Occurrence only. 
B) Occurrence and accuracy only. 
C) Completeness only. 
D) Accuracy only.

Question 10

In performing a search for unrecorded retirements of fixed assets,an auditor most likely would

Accepted Answer

A) Inspect the property ledger and the insurance and tax records,and then tour the client's facilities. 
B) Tour the client's facilities,and then inspect the property ledger,and the insurance and tax records. 
C) Analyze the repair and maintenance account,and then tour the client's facilities. 
D) Tour the client's facilities,and then analyze the repair and maintenance account. 
A) Inspect the property ledger and the insurance and tax records,and then tour the client's facilities. 
B) Tour the client's facilities,and then inspect the property ledger,and the insurance and tax records. 
C) Analyze the repair and maintenance account,and then tour the client's facilities. 
D) Tour the client's facilities,and then analyze the repair and maintenance account.

Question 11

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Accepted Answer

A) Examining authorization forms for new employees. 
B) Comparing payroll registers with original batch transmittal data. 
C) Authorizing payroll rate changes for all employees. 
D) Hiring all subordinate payroll department employees. 
A) Examining authorization forms for new employees. 
B) Comparing payroll registers with original batch transmittal data. 
C) Authorizing payroll rate changes for all employees. 
D) Hiring all subordinate payroll department employees.

Question 12

Which of the following audit procedures is best for identifying unrecorded accounts payable?

Accepted Answer

A) Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period. 
B) Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports. 
C) Examining unusual relationships between monthly accounts payable balances and recorded cash payments. 
D) Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date. 
A) Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period. 
B) Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports. 
C) Examining unusual relationships between monthly accounts payable balances and recorded cash payments. 
D) Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.

Question 13

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Accepted Answer

A) Ensure that employees who were absent on a payroll distribution day are not paid for that day. 
B) Prevent the paymaster from cashing checks that are unclaimed for several weeks. 
C) Prevent a bona fide employee's check from being claimed by another employee. 
D) Detect any fictitious employee who may have been placed on the payroll. 
A) Ensure that employees who were absent on a payroll distribution day are not paid for that day. 
B) Prevent the paymaster from cashing checks that are unclaimed for several weeks. 
C) Prevent a bona fide employee's check from being claimed by another employee. 
D) Detect any fictitious employee who may have been placed on the payroll.

Question 14

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Accepted Answer

A) Cash. 
B) Purchases Returns. 
C) Sales Returns. 
D) Prepaid Insurance. 
A) Cash. 
B) Purchases Returns. 
C) Sales Returns. 
D) Prepaid Insurance.

Question 15

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

Accepted Answer

A) Analytical review procedures. 
B) Recalculation of accruals. 
C) Comparison of accruals to subsequent payments. 
D) Detail vouching of payroll expense entries. 
A) Analytical review procedures. 
B) Recalculation of accruals. 
C) Comparison of accruals to subsequent payments. 
D) Detail vouching of payroll expense entries.

Question 16

Purchase cutoff procedures should be designed to produce evidence of whether merchandise is included in the inventory of the client company if the company

Accepted Answer

A) Has paid for the merchandise. 
B) Has physical possession of the merchandise. 
C) Holds legal title to the merchandise. 
D) Holds the shipping documents for the merchandise issued in the company's name. 
A) Has paid for the merchandise. 
B) Has physical possession of the merchandise. 
C) Holds legal title to the merchandise. 
D) Holds the shipping documents for the merchandise issued in the company's name.

Question 17

In order to ensure appropriate segregation of duties,the supervisor in each department handles the custody of the payroll checks.

Accepted Answer

A) True 
 B)False

Question 18

When performing procedures in a search of unrecorded liabilities,auditors can utilize various sources of evidence/information (e.g.,documents,files,management and clerical personnel).
Required:
List at least five,but not more than seven,sources of evidence/information for the search for unrecorded liabilities.
(Do not write procedures.Do not take time to write about particular evidence that can be obtained or reasons for using the sources.)

Accepted Answer

Inquiry of client personnel,open purchas

Question 19

The auditors' "search for unrecorded liabilities" should emphasize payments made shortly after the end of the year.

Accepted Answer

A) True 
 B)False

Question 20

For the copy of the purchase order that goes to the receiving department,it is best to

Accepted Answer

A) Leave off the description of the goods ordered. 
B) Leave off the quantity of the goods ordered. 
C) Leave off the name of the vendor. 
D) Have the receiving department forward all copies of the purchase order to accounts payable. 
A) Leave off the description of the goods ordered. 
B) Leave off the quantity of the goods ordered. 
C) Leave off the name of the vendor. 
D) Have the receiving department forward all copies of the purchase order to accounts payable.

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

The five functional responsibilities of a payroll cycle are ,,,and ____. Reference: Question also found in study guide

When auditing PP&E,the auditor's approach is generally to

If the risk of material misstatement is assessed as high,it is likely that additional substantive procedures will be required.

Acquisition and expenditure activities include (1)purchasing goods and services,(2)receiving the goods or services,(3)recording the asset or expense and related liability,and (4)depreciating assets purchased.

Purchases are requisitioned by a purchasing department that seeks the best prices and quality.

Tracing a sample of time clock cards to payroll registers (journals)is a procedure designed to obtain evidence about the transaction assertion(s)of

In performing a search for unrecorded retirements of fixed assets,an auditor most likely would

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Which of the following audit procedures is best for identifying unrecorded accounts payable?

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

Purchase cutoff procedures should be designed to produce evidence of whether merchandise is included in the inventory of the client company if the company

In order to ensure appropriate segregation of duties,the supervisor in each department handles the custody of the payroll checks.

The auditors' "search for unrecorded liabilities" should emphasize payments made shortly after the end of the year.

For the copy of the purchase order that goes to the receiving department,it is best to

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 8: Acquisition and Expenditure Cycle

Which of the following personnel department procedures reduces the risk of payroll fraud and represents an appropriate responsibility for the department?

The five functional responsibilities of a payroll cycle are ____________________________,____________________________,____________________________,and ________________________________. Reference: Question also found in study guide

When auditing PP&E,the auditor's approach is generally to

If the risk of material misstatement is assessed as high,it is likely that additional substantive procedures will be required.

Acquisition and expenditure activities include (1)purchasing goods and services,(2)receiving the goods or services,(3)recording the asset or expense and related liability,and (4)depreciating assets purchased.

Purchases are requisitioned by a purchasing department that seeks the best prices and quality.

Tracing a sample of time clock cards to payroll registers (journals)is a procedure designed to obtain evidence about the transaction assertion(s)of

In performing a search for unrecorded retirements of fixed assets,an auditor most likely would

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Which of the following audit procedures is best for identifying unrecorded accounts payable?

A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day.This policy was most likely adopted to

Which of the following accounts does not appear in the acquisition and expenditure cycle?

Substantive tests of account balances in the payroll cycle are likely to include the following procedures except

Purchase cutoff procedures should be designed to produce evidence of whether merchandise is included in the inventory of the client company if the company

In order to ensure appropriate segregation of duties,the supervisor in each department handles the custody of the payroll checks.

The auditors' "search for unrecorded liabilities" should emphasize payments made shortly after the end of the year.

For the copy of the purchase order that goes to the receiving department,it is best to

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

The five functional responsibilities of a payroll cycle are ,,,and ____. Reference: Question also found in study guide