Identify five general ledger accounts that are likely to be affected by the payroll and personnel cycle in most audits.
20-2 (OBJECTIVES 20-1, 20-3) Explain the relationship between the payroll and personnel cycle and inventory valuation.
20-3 (OBJECTIVE 20-2) Distinguish among a payroll master file, a W-2 form, and a payroll tax return. Explain the purpose of each.
20-4 (OBJECTIVE 20-2) Explain what is meant by an imprest payroll account. What is its purpose as a control over payroll?
20-5 (OBJECTIVES 20-2, 20-3) List the supporting documents and records the auditor will examine in a typical payroll audit in which the primary objective is to detect fraud.
20-6 (OBJECTIVES 20-2, 20-3) Evaluate the following comment by an auditor: “My job is to determine whether the payroll records are fairly stated in accordance with accounting standards, not to find out whether they are following proper hiring and termination procedures. When I conduct an audit of payroll, I keep out of the human resources department and stick to the time cards, journals, and payroll checks. I don’t care whom they hire and whom they fire, as long as they properly pay the employees they have.”
20-7 (OBJECTIVE 20-3) Distinguish between the following payroll audit procedures and state the purpose of each: (1) trace a random sample of prenumbered time cards to the related payments in the payroll register and compare the hours worked with the hours paid, and
(2) vouch a random sample of payments from the payroll register to the related time cards and compare the hours worked with the hours paid. Which of these two procedures is typically more important in the audit of payroll? Why?
