Which of the following is a control procedure that most likely could help prevent employee payroll fraud? (Points : 2)

Salary rates resulting from new hires are approved by the payroll supervisor. The personnel department promptly sends employee termination notices to the payroll supervisor. Employees who distribute payroll checks forward unclaimed payroll checks to the absent employees supervisors. Total hours used for determination of employee gross pay are calculated by the payroll supervisor.

Question 12.12. In auditing payroll, an auditor most likely would: (Points : 2)

Trace individual employee deductions to entity journal entries. Verify that checks representing unclaimed wages are mailed. Observe entity employees during a payroll distribution. Compare entity payroll costs with standards or budgets.

Question 13.13. The Hodges Company has requested that the Drexel CPA firm perform an audit only on its balance sheet. What should be the firms response? (Points : 2)

As long as the scope of the auditors work is not limited, the auditor may accept this engagement and provide an audit report based on the findings. The auditor can accept this type of engagement, but must, at a minimum, add an extra paragraph at the end of the report to draw attention to the exclusion of the other statements. The auditor cannot take this type of engagement. The auditor can accept this type of engagement, but must issue a qualified opinion.

Question 14.14. An entity's income statements were misstated due to the improper recording of journal entries that involved numerous debits and credits to an unusual combination of expense and revenue accounts. The auditor most likely could have detected this irregularity by: (Points : 2)

Evaluating the effectiveness of the internal control structure policies and procedures. Tracing a sample of journal entries to the general ledger. Investigating the reconciliations between controlling accounts and subsidiary records. Performing analytical procedures designed to disclose differences from expectations in certain revenue and expense accounts.

Question 15.15. An auditor would most likely verify the interest earned on bond investments by: (Points : 2)

Vouching the receipt and deposit of interest checks. Testing the internal controls over cash receipts. Recomputing the interest earned on the basis of bond face amount, interest rate, and period held. Confirming the bond interest rate with the issuer of the bonds.

Question 16.16. During the initial planning phase of an audit, a CPA most likely would: (Points : 2)

Discuss the timing of certain audit procedures with the client's management. Inquire of the client's attorney as to whether any unrecorded claims are probable of assertion. Evaluate the reasonableness of the client's accounting estimates. Review specific internal control activities that are likely to prevent fraud.

Question 17.17. Analytical procedures used in planning an audit should focus on identifying (Points : 2)

The predictability of financial data from individual transactions. Material weaknesses in the internal control structure. Areas that may represent specific risks relevant to the audit. The various assertions that are embodied in the financial statements.