The following questions concern audit testing of the payroll and personnel cycle. Choose the best response.

a. A computer operator perpetrated a theft by preparing erroneous T-4 forms. The operator's income tax withheld was overstated by $2,000 and the income tax withheld from all other employees was understated. Which of the following audit procedures would detect such a fraud?

(1) Multiplication of the applicable rate by the individual's gross taxable earnings.

(2) Using employees' TD-1 forms and withholding tables to determine whether deductions authorized per pay period agree with amounts deducted per pay period.

(3) Footing and crossfooting of the payroll register followed by tracing postings to the general ledger.

(4) Vouching cancelled cheques to income tax withholding remittance forms.

b. In the audit of which of the following types of profit- oriented enterprises would the auditor be most likely to place special emphasis on tests of controls for proper classifications of payroll transactions?

(1) A service organization

(2) A wholesaling organization

(3) A retailing organization

(4) A manufacturing organization

c. A common audit procedure in the audit of payroll transactions involves tracing selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that

(1) only proper employees worked and their pay was properly computed.

(2) all, employee? worked the number of hours for which their pay was computed.

(3) jobs on which employees worked were charged with the appropriate labour cost.

(4) internal controls relating to payroll disbursements are operating effectively.