Home » Questions » Which of the following internal control activities could best prevent direct Show Question Which of the following internal control activities could best prevent direct labor from being charged to manufacturing
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10. Which of the following departments most likely would approve changes in pay rates and deductions from employee salaries? 11. Possible misstatements related to the occurrence assertion for
payroll transactions include all of the following except: D. Payments to valid employees at a rate in excess of the authorized amount. D. Payments to valid employees at a rate in excess of the authorized amount.
12. The proper use of pre-numbered termination notice forms by the Payroll Department should provide assurance that all D. Terminated employees are removed from the payroll. 13. When examining payroll transactions, an auditor is primarily concerned with the possibility of B. Posting of gross payroll amounts to incorrect salary expense accounts. 14. An auditor vouched data for a sample of employees in a payroll register to approved clock card/time sheet data to provide assurance that B. Employees worked the number of hours for which they are paid. 15. Which of the following internal control objectives is likely to be a larger concern in the audit of the payroll cycle? B. Recorded payroll transactions are valid. 16. Which of the following circumstances most likely would cause an auditor to suspect an employee payroll fraud scheme? A. There are significant unexplained variances between standard and actual labor cost. 17. Which of the following could test the assertion of cutoff for payroll-related liabilities?
C. Examine payroll tax returns to determine that the expense was recorded in the proper period. 18. Which of the following could test the assertion of classification for payroll-related liabilities? D. Review payroll liabilities for proper reporting as short- or long-term. 19. All of the following are incorporated into valuation models except: 20. A surprise observation by an auditor of a client's regular distribution of paychecks is primarily designed to satisfy the auditor that D. Names on the company payroll are those of bona fide employees presently on the job. 21. Which of the following is the best reason why an auditor should consider observing a client's distribution of regular payroll checks? A. To ensure that names on the company payroll are those of bona fide employees presently on the job. 22. The purpose of segregating the duties of distributing payroll checks and hiring personnel is to separate the C. Authorization of transactions from the custody of related assets. 23. The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the D. Authorization of transactions from the custody of related assets. 24. Which of the following is an effective internal control used to prove that production department employees are properly validating payroll timecards at a time-recording station? C. Daily reports showing time charged to jobs should be approved by the foreman and compared to the total hours worked on the employee timecards. 25. A large retail enterprise has established a policy that requires that the paymaster deliver all unclaimed payroll checks to the Internal Auditing Department at the end of each payroll distribution day. This policy was most likely adopted to D. Detect any fictitious employee who may have been placed on the payroll. 26. In the weekly computer run to prepare payroll checks, a check was printed for an employee who had been terminated the previous week. Which of the following controls, if properly utilized, would have been most effective in preventing the error or ensuring its prompt detection? A. A control total for hours worked, prepared from time cards collected by the Timekeeping Department. 27. 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? C. Make a surprise observation of the company's regular distribution of paychecks. 28. Transactions processed through the payroll process include all of the following except: B. Payments to independent contractors for services rendered. 29. Vouching selected items from the payroll register to employee time cards that have been approved by supervisory personnel provides evidence that D. Employees worked the number of hours for which their pay was computed. 30. Which of the following activities most likely would detect whether payroll data are accurately processed? B. Use test data to verify the accurate performance of payroll processing. 31. When control
risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying substantive analytical procedures and D. Recalculating payroll accruals. 32. Which of the following procedures would normally be performed by the auditor when conducting tests of payroll transactions? B. Vouch number of hours worked as shown on payroll to time cards and time reports signed by the foreman. 33. A substantive test of transactions to test the completeness assertion includes A. Tracing a sample of time cards to the payroll register. 34. Comparing selected items from the payroll register to employee time records that have been approved by supervisory personnel tests which of the following assertions for
payroll expense? 35. An auditor most likely would extend substantive tests of payroll when C. Overpayments are discovered in performing tests of details. 36. Which of the following could test the occurrence assertion for payroll-related liabilities? A. Compare items in accrued payroll taxes to the supporting payroll tax return. 37. Which of the following is required of an auditor who is testing the fair value of options in share-based
compensation? B. Testing the inputs used in the valuation model. 38. In an IT payroll system environment, an auditor would be least likely to use test data to test controls
related to D. Agreement of hours per clock cards with hours on time cards. 39. Effective internal control over unclaimed payroll checks that are kept by
the Treasury Department would include Accounting Department procedures that require D. Periodic accounting for the actual checks representing unclaimed wages. 40. Effective internal control over the payroll function would include which of the following? D. Total time spent on jobs should be compared with total time indicated on timeclock punch cards. 41. A CPA reviews a client's payroll procedures. The CPA would consider internal
control to be less than effective if a payroll department supervisor was assigned the responsibility for A. Distributing payroll checks to employees. 42. An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for B. Having custody over unclaimed paychecks. 43. Which of the following is a control activity that most likely could help prevent employee payroll fraud? A. The Human Resource department promptly sends employee termination notices to the payroll supervisor. 44. An effective system of internal control over the payroll function would include A. Verification of agreement of job time tickets with employee clock card hours by a payroll department employee. 45. Key segregation of duties in the human resource management process include all of the following except: C. The human resource function should be separate from setting salaries. 46. In testing the payroll of a large company, the auditor wants to establish that the individuals included in a sample actually were employees of the
company during the period under review. What will be the best source to determine this? D. Examination of Human Resource Department records. 47. During the current year being audited, Hitech, Inc. changed from a conventional payroll punch clock to a computerized payroll time system. Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records. Because of this change C. Without paper clock cards, part of the audit trail has been altered. 48. Which of the following internal control activities could best prevent direct labor from being charged to manufacturing overhead? B. Comparison of daily journal entries with the factory labor summary. 49. Which of the following internal control activities
most likely would prevent direct labor hours from being charged to manufacturing overhead? C. Use of time tickets to record actual labor worked on production orders. 50. An auditor most likely would assess control risk at the maximum if the payroll department supervisor is responsible for C. Authorizing payroll rate changes for all employees. 51. In determining the effectiveness of an entity's policies and procedures relating to the existence or occurrence assertion for payroll transactions, an auditor most likely would inquire about and A. Observe the segregation of duties concerning human resource responsibilities and payroll disbursement. 52. In the substantive audit procedures for payroll where the control risk is set at low, an auditor most likely would D. Compare payroll costs with entity standards or budgets. 53. Tracing a sample of time cards before and after period end to the weekly payroll report and tracing the weekly payroll report to the general ledger to verify that payroll transactions are recorded in the proper period would provide evidence primarily for which assertion? 54. Comparing
amounts selected from the payroll account analysis for payroll accruals to supporting documentation would provide evidence primarily for which assertion? What are the four internal control measures?Key Internal Control Activities. Segregation of Duties. Duties are divided among different employees to reduce the risk of error or inappropriate actions. ... . Authorization and Approval. ... . Reconciliation and Review. ... . Physical Security.. What are the 7 internal control procedures?What are the 7 internal controls procedures?. Separation of duties.. Access controls.. Physical audits.. Standardised financial documents.. Periodic trial balances.. Periodic reconciliations.. Approval authority.. What are examples of internal control procedures?Examples of Internal Controls. Segregation of Duties. When work duties are divided or segregated among different people to reduce the risk of error or inappropriate actions.. Physical Controls. ... . Reconciliations. ... . Policies and Procedures. ... . Transaction and Activity Reviews. ... . Information Processing Controls.. Which of the following is an example of a preventive control in the workplace?Examples of preventive controls are separation of duties, proper authorization, adequate documentation, and physical control over assets. Detective controls, on the other hand, attempt to detect undesirable acts.
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