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Auditing & Assurance 101 Practice Test: Audit of the Payroll and Personnel Cycle
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The audit of the payroll and personnel cycle evaluates whether account balances are fairly stated in accordance with generally accepted accounting principles.  Here are some objectives of a payroll audit: Accuracy: Ensure that all payroll components are correctly calculated Completeness: Verify that salary and benefit components have been processed for all employees and paid out within the specified pay periods Compliance: Ensure compliance with various tax laws and local labor regulations  Here are some benefits of a payroll audit: Improved employee satisfaction, Payroll risk... Show more
Auditing & Assurance 101 Practice Test: Audit of the Payroll and Personnel Cycle
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25 Questions

1. Which of the following errors gives the auditor the least concern in auditing payroll transactions?
2. Which of the following audit procedures would be the most effective in testing for nonexistent employees?
3. Which of the following best describes inherent risk for balance-related audit objectives as they relate to payroll?
4. The primary concern in testing payroll-related liabilities is to make sure that:
5. 'Physical control over assets' is not a type of control that is applicable to the payroll cycle.
6. As a part of the auditor's responsibility for ________, the auditor should review the preparation of at least one of each type of payroll tax form the client is responsible for filing.
7. Auditors seldom expect to find misstatements when testing payroll transactions.
8. The periodic payment from the general cash account to the payroll account for net payroll should be tested for at least one payroll period. The primary audit procedure is a(n):
9. The most important means of verifying account balances in the payroll and personnel cycle are:
10. The job time ticket indicates the starting and stopping times of work during the pay period.
11. Which of the following is not a procedure that can be performed on canceled checks in an effort to detect defalcations?
12. Verification of the legitimacy of year-end unpaid bonuses to officers and employees can be accomplished by comparing the recorded accrual to the amount:
13. Which of the following statements is correct?
14. Which of the following types of audit tests is usually emphasized due to a lack of independent third-party evidence related to payroll transactions?
15. What are the two major balance-related audit objectives in testing payroll liabilities?
16. Paying employees for their services ends the payroll and personnel cycle.
17. Which of the following is a major balance-related audit objective in testing payroll liabilities?
18. An imprest payroll account that has a significant balance may indicate the presence of:
19. The most important consideration in evaluating the fairness of the amounts accrued for vacation pay, sick pay, and other benefits is the:
20. It is generally more difficult for the auditor to detect payment of fraudulent hours than payment of fictitious employees.
21. Which of the following types of audit procedures is ordinarily emphasized the least when auditing payroll?
22. For good internal control, the payroll function should be independent of the human resources department.
23. When auditing the payroll and personnel cycle, tests of controls are routinely performed.
24. Supervisory personnel in the functional department is responsible for evaluating employees who should be responsible for authorizing the addition and deletion of employees from the payroll.
25. The nature, extent, and timing of substantive tests of payroll transactions vary depending, in part, on assessed control risk.

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