Tests of controls payroll and personnel cycle. audit ch 20 Flashcards 2022-10-25
Tests of controls payroll and personnel cycle Rating:
Tests of controls are an important aspect of auditing, as they help to ensure the reliability and accuracy of financial statements. In the payroll and personnel cycle, tests of controls are used to evaluate the effectiveness of the controls in place to ensure that payroll and personnel transactions are properly recorded, processed, and reported.
There are several types of tests of controls that can be used in the payroll and personnel cycle. One common test is the substantive test of transactions, which involves reviewing a sample of payroll and personnel transactions to determine if they are properly recorded in the accounting records. This may include reviewing time sheets, payroll records, and other documentation to ensure that the transactions are accurately reflected in the financial statements.
Another type of test of controls in the payroll and personnel cycle is the substantive test of balances. This involves reviewing the balances of various accounts related to payroll and personnel transactions, such as employee salaries and benefits, to ensure that they are accurately reflected in the financial statements. This may include reviewing supporting documentation, such as contracts and agreements with employees, to ensure that the balances are correct.
In addition to these substantive tests, auditors may also conduct tests of controls at a higher level, such as evaluating the overall design and effectiveness of the controls in place to ensure the accuracy of payroll and personnel transactions. This may include reviewing policies and procedures, as well as testing the controls through simulation or other means.
Overall, tests of controls in the payroll and personnel cycle are important for ensuring the reliability and accuracy of financial statements. By evaluating the controls in place and performing substantive tests of transactions and balances, auditors can provide assurance that payroll and personnel transactions are properly recorded, processed, and reported.
Payroll and Personnel Cycle
D segregation of duties is present between the payroll function and the payment function for cash disbursements. A check digit Premium Auditing Financial audit Internal control Assignment 5: Logical Design Part II Assignment 5: Logical Design Part II Introduce the concept of normalization in a letter to the executive and explain the pros and cons. Yes No No hard Once the auditor determines that the company's policy for accruing wages is consistent with prior years, the appropriate audit procedure to test for accuracy and cutoff is: a. After a payroll check is cashed and returned to the employee it is referred to as a depository check. If an auditor wishes to test the completeness transaction-related audit objective in the payroll and personnel cycle, which of the following would be a reasonable test of control? Improper allocation to jobs or processes.
Use digital checks and direct deposit whenever possible, making sure that check stock is kept in a secure location and regularly inventoried. Completeness All payroll expenses and related accruals have been recorded. The personnel cycle and payroll checks examined for completeness and to ensure they are correctly numbered and accounted against bank accounts which are independently reconciled. There are three classes of transactions within the payroll cycle - salaried employees, hourly employees, and commissioned employees. B It is difficult for an auditor to discover fraudulent hours. Design tests of controls and assess related control risks over the payroll and personnel cycle. Cut-off Payroll transactions should be recorded in the correct period.
A Payroll transactions are properly disclosed and presented in the notes to the financial statements. C performing extensive tests of details. Design tests of details of balances for accounts in the payroll and personnel cycle. It is rare that payroll checks are direct-deposited into employees' bank accounts. Scan endorsements for unusual or recurring second endorsements.
Which of the following is not an advantage of such an account? C Recorded transactions represent valid payments. The careful and timely preparation of all payroll tax returns is necessary to avoid penalties and criminal charges. Required: a What are the five major types of control activities? State the relevant audit procedure to identify the following types of fraud. B the substantive tests of transactions for the payroll cycle are the same for all audit clients. Payroll and Personnel Cycle The texts are the property of their respective authors and we thank them for giving us the opportunity to share for free to students, teachers and users of the Web their texts will used only for illustrative educational and scientific purposes only. It would also establish and maintain Premium Relational model Database normalization Audit: Auditing and Substantive Tests Question 1 AICPA. The most important consideration in evaluating the fairness of the amounts accrued for vacation pay, sick pay, and other benefits is the: a.
Audit program design part ii payroll and personnel cycle... Free Essays
Most companies use an imprest account to pay the payroll. The anomalies can lead to the loss of needed data. Control Risks Assessment of Payroll and Personnel Cycle 2. Which of the following is the best way for an auditor to determine that every name on a company's payroll is that of a bona fide employee presently on the job? The most important control in the timely preparation of these returns is: A computerized preparation of tax returns. Which of the following is an effective internal accounting control used to prove that production department employees are properly validating payroll time cards at a time-recording station? Which of the following errors gives the auditor the least concern in auditing payroll transactions? This process is additional steps to what should be a straightforward payroll process, but this kind of review is necessary as a step to prevent theft, data leaks, and theft. AUDIT PROGRAM DESIGN PART II AUDIT PROGRAM DESIGN PART II Sales and Collection Cycle The objective in the audit of the sales and collection cycle is to evaluate whether the account balance affected by the cycle are fairly presented in accordance with accounting standards. Account for a sequence of payroll checks.
If more than one check is going to the same address, it may be because a payroll clerk is routing illicit payments for fake employees to his or her address. The periodic payment from the general cash account to the payroll account for net payroll should be tested for at least one payroll period. Ensuring that all your HR employees are trained in the correct and accurate processes is essential in maintain safety in your Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. Distribution of pay checks should be performed by someone who is not involved in the other payroll functions. C Payroll is a significant portion of inventory for retail and service industry companies. C Distribution of pay checks should be performed by someone who is not involved in the other payroll functions. Maintenance access to systems increases the risk that logic will be corrupted either by the accident or intent to defraud.
Test of Controls The main issue of internal controls over payroll and personnel
. Computational errors in formulas when a computerized system is used. C gross payroll plus the total contributed by the employer for payroll taxes. There is a pay premium associated with these hours, so the cost to the company is higher, as is the temptation for employees to claim them. The payment of cash to employees should be replaced with payment by checks.
C under withholding of amounts required to be withheld. The confidentiality of employee payroll data should be carefully protected to prevent fraud. Internal controls over payroll are effective for almost all companies, even small ones. Which of the following is not correct regarding controls over the processing of payroll? Inadequate or ineffective controls in this area may give rise to financial and operational risks. B payment of salaried employees. The financial statements are divided into cycles to better manage the audit and disperse to staff within the firm.