Question
12-22 ( Objectives 12-2 , 12-3 , 12-4 ) Each of the following internal controls has been taken from a standard internal control questionnaire used
12-22 (Objectives 12-2, 12-3, 12-4) Each of the following internal controls has been taken from a standard internal control questionnaire used by a CPA firm for assessing control risk in the payroll and personnel cycle.
-
Human resource policies require an investigation of an employment application from new employees. Investigation includes checking the employees background, former employers, and references.
-
Approval of department head or foreman on time records is required before preparing payroll.
-
All prenumbered time records are accounted for before beginning data entry for preparation of payroll.
-
The payroll accounting software calculates gross and net pay based on hours inputted and information in employee master files, and payroll accounting personnel double-check the mathematical accuracy on a test basis.
-
The payroll accounting software application will not accept data input for an employee number not contained in the employee master file.
-
Persons preparing the payroll do not perform other payroll duties (e.g., human resources or approval of time records) nor do they have access to payroll data master files or cash.
-
Written termination notices, with properly documented reasons for termination, and approval by an appropriate official are required.
-
All checks and notices of electronic payments not distributed to employees are returned to the treasurer for safekeeping and follow-up.
-
Online ability to add employees or change pay rates to the payroll master file is restricted via passwords to authorized human resource personnel.
Required
-
For each internal control, identify the type(s) of specific control activity (or activities) to which it applies (such as adequate documents and records or physical control over assets and records).
-
For each internal control, identify the transaction-related audit objective(s) to which it applies.
-
For each internal control, identify a specific misstatement that is likely to be prevented if the control exists and is effective.
-
For each control, list a specific misstatement that could result from the absence of the control.
-
For each control, identify one audit test that the auditor could use to uncover misstatements resulting from the absence of the control.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started