Identify whether each of the procedures is primarily a test of control or a substantive test of transactions.

Following are some of the tests of controls and substantive tests of transactions procedures often performed in the payroll and personnel cycle.
1. Examine the time card for the approval of a supervisor.
2. Recompute hours on the time card and compare the total with the total hours for
which the employee has been paid.
3. Perform a surprise payroll payoff and observe employees picking up their checks.
4. Compare the employee name, date, check number, and amounts on cancelled checks
with the payroll journal.
5. Trace the hours from the employee time records to job tickets to make sure that the
total reconciles, and trace each job ticket to the job-cost record.
6. Reconcile the monthly payroll total for direct manufacturing labor with the labor
cost distribution.
7. Use audit software to account for the sequence of payroll checks in the payroll
journal.
a. Identify whether each of the procedures is primarily a test of control or a substantive
test of transactions.
b. Identify the transaction-related audit objective(s) of each of the procedures.
20-21 (OBJECTIVES 20-2, 20-3) The following misstatements are included in the accounting
records of Newcomb & Company:
1. Direct labor was unintentionally charged to job 620 instead of job 602 by the pay-
roll clerk when he key-entered the labor distribution sheets. Job 602 was completed
and the costs were expensed in the current year, whereas job 620 was included in
work-in-process.
2. Joe Block and Frank Demery take turns “punching in” for each other every few days.
The absent employee comes in at noon and tells his foreman that he had car trouble
or some other problem. The foreman does not know that the employee is getting paid
for the time.
3. The foreman submits a fraudulent time card for a former employee each week and delivers the related payroll check to the employee’s house on the way home from work.
They split the amount of the paycheck.
4. Employees often overlook recording their hours worked on job-cost tickets as re-
quired by the system. Many of the client’s contracts are on a cost-plus basis.
5. The payroll clerk prepares a check to the same nonexistent person every week when
he enters payroll transactions in the computer system, which also records the amount
in the payroll journal. He submits it along with all other payroll checks for signature.
When the checks are returned to him for distribution, he takes the check and deposits
it in a special bank account bearing that person’s name.
6. In withholding payroll taxes from employees, the computer operator deducts $3.50
extra federal income taxes from several employees each week and credits the amount
to his own employee earnings record.

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