SOLVED

70) Despite the large dollar amounts involved in the payroll and personnel cycle, auditors typically spend less time auditing this cycle than others. A) True B) False 71) It is generally more difficult for the auditor to detect payment of fraudulent hours than payment of fictitious employees. A) True B) False 72) One common substantive test of payroll transactions for the existence objective is to compare canceled payroll checks with personnel records. A) True B) False 73) The audit procedure “Recompute hours worked from time cards” is normally performed when testing the completeness objective for payroll. A) True B) False Learning Objective 20-4 1) Inherent risk for payroll-related liabilities is normally higher than for accounts receivable. A) True B) False Learning Objective 20-5 1) Which of the following is a major balance-related audit objective in testing payroll liabilities? A) Payroll tax expense is properly recorded. B) Transactions in the payroll and personnel cycle are recorded in the proper period. C) Accrual of salaries is the same as the amounts paid on the payroll tax returns. D) Time records are recorded by supervisors. 2) The primary concern in testing payroll-related liabilities is to make sure that: A) accruals are properly valued. B) transactions are recorded in the proper period. C) there are no understated or omitted accruals. D) the accruals are not overstated. 3) Verification of the legitimacy of year-end unpaid bonuses to officers and employees can be accomplished by comparing the recorded accrual to the amount: A) in the expense account. B) used in the prior period. C) authorized in the minutes of the board. D) paid in the subsequent period. 4) The usual audit test for a public company’s officer compensation is to obtain the authorized salary of each officer from the minutes of the board of directors and compare it with: A) the SEC’s 10-K report. the company’s federal income tax return. Yes Yes B) the SEC’s 10-K report. the company’s federal income tax return. No No C) the SEC’s 10-K report. the company’s federal income tax return. Yes No D) the SEC’s 10-K report. the company’s federal income tax return. No Yes 5) What are the two major balance-related audit objectives in testing payroll liabilities? A) Accuracy and detail tie-in B) Completeness and valuation C) Completeness and rights and obligations D) Accuracy and cutoff