Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 3, Problem 19CYBK
To determine
Introduction:Interior control is a significant piece of each association. It helps in keeping up the effectiveness of the administration. It is an approach utilized by the administration to evade deceitful conduct and expanding responsibility in the association.
To choose: The correct option.
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Which of the following activities performed by a department supervisor most likely would help to prevent or detect a payroll fraud?a. Distributing paychecks directly to department employees.b. Setting the pay rate for departmental employees.c. Hiring employees and authorizing them to be added to payroll.d. Approving a summary of hours each employee worked during the pay period.
Which of the following activities most likely would be considered a weakness in an entity’s internal control over payroll?a. A voucher for the amount of the payroll is prepared in the general accounting department based on the payroll department’s payroll summary.
b. Payroll checks are prepared by the accounts payable department and signed by the treasurer.
c. The employee who distributes payroll check returns unclaimed payroll checks to the payroll department.
d. The personnel department sends employees’ termination notices to the payroll department.
Explain why each of the following combinations of tasks should or should not beseparated to achieve adequate internal control.a. Approval of bad debt write-offs and the reconciliation of the accounts receivablesubsidiary ledger and the general ledger control account.b. Distribution of payroll checks to employees and approval of employee time cards.c. Posting of amounts from both the cash receipts and the cash disbursements journalsto the general ledger.d. Writing checks to vendors and posting to the cash account.e. Recording cash receipts in the journal and preparing the bank reconciliation.
Chapter 3 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 3 - Prob. 1CYBKCh. 3 - Prob. 2CYBKCh. 3 - Which of the following are affected by the quality...Ch. 3 - Prob. 4CYBKCh. 3 - Prob. 5CYBKCh. 3 - Prob. 6CYBKCh. 3 - What are the components of internal control per...Ch. 3 - Prob. 8CYBKCh. 3 - Prob. 9CYBKCh. 3 - The control environment is seen as the foundation...
Ch. 3 - Prob. 11CYBKCh. 3 - Which one of the following components of internal...Ch. 3 - Prob. 13CYBKCh. 3 - Prob. 14CYBKCh. 3 - Prob. 15CYBKCh. 3 - Prob. 16CYBKCh. 3 - Prob. 17CYBKCh. 3 - Prob. 18CYBKCh. 3 - Prob. 19CYBKCh. 3 - Prob. 20CYBKCh. 3 - Prob. 21CYBKCh. 3 - Prob. 22CYBKCh. 3 - Prob. 23CYBKCh. 3 - Prob. 24CYBKCh. 3 - Prob. 25CYBKCh. 3 - Prob. 26CYBKCh. 3 - Prob. 27CYBKCh. 3 - Prob. 28CYBKCh. 3 - Prob. 29CYBKCh. 3 - Prob. 30CYBKCh. 3 - Prob. 31CYBKCh. 3 - Prob. 32CYBKCh. 3 - Prob. 33CYBKCh. 3 - Prob. 34CYBKCh. 3 - Prob. 35CYBKCh. 3 - Prob. 36CYBKCh. 3 - Prob. 37CYBKCh. 3 - Prob. 38CYBKCh. 3 - Prob. 39CYBKCh. 3 - Prob. 40CYBKCh. 3 - Prob. 1RQSCCh. 3 - Prob. 2RQSCCh. 3 - Prob. 3RQSCCh. 3 - Prob. 4RQSCCh. 3 - Distinguish between entity-wide and transaction...Ch. 3 - Refer to Exhibit 3.2. List the principles...Ch. 3 - Prob. 7RQSCCh. 3 - Prob. 8RQSCCh. 3 - Prob. 9RQSCCh. 3 - Prob. 10RQSCCh. 3 - Refer to Exhibit 3.3. For each risk assessment...Ch. 3 - Prob. 12RQSCCh. 3 - Prob. 13RQSCCh. 3 - Prob. 14RQSCCh. 3 - Prob. 15RQSCCh. 3 - Prob. 16RQSCCh. 3 - Prob. 17RQSCCh. 3 - Prob. 18RQSCCh. 3 - Authorization of transactions is a key control in...Ch. 3 - Prob. 20RQSCCh. 3 - Prob. 21RQSCCh. 3 - Prob. 22RQSCCh. 3 - Prob. 23RQSCCh. 3 - Prob. 24RQSCCh. 3 - Prob. 25RQSCCh. 3 - Prob. 26RQSCCh. 3 - Prob. 27RQSCCh. 3 - Prob. 28RQSCCh. 3 - Refer to Exhibit 3.9. What are the important...Ch. 3 - Refer to Exhibit 3.10 and Exhibit 3.11. Describe...Ch. 3 - Prob. 31RQSCCh. 3 - Prob. 32RQSCCh. 3 - Prob. 33RQSCCh. 3 - Prob. 34RQSCCh. 3 - Assume that management is gathering evidence as...Ch. 3 - Prob. 36RQSCCh. 3 - Prob. 37RQSCCh. 3 - Prob. 38RQSCCh. 3 - Prob. 39RQSCCh. 3 - Prob. 40RQSCCh. 3 - Prob. 39FFCh. 3 - Diamond Foods, Inc. (LO 8, 9) In February 2012,...
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- There are several elements to internal controls. Which of the following would not address the issue of having cash transactions reported in the accounting records? A. One employee would have access to the cash register. B. The cash drawer should be closed out, and cash and the sales register should be reconciled on a prenumbered form. C. Ask customers to report to a manager if they do not receive a sales receipt or invoice. D. The person behind the cash register should also be responsible for making price adjustments.arrow_forward1. Segregation of Duties. Explain why each of the following combinations of tasks should, or should not, be separated to achieve adequate internal control. a. Approval of bad debt write-offs and the reconciliation of the accounts receivable subsidiary ledger and the general ledger control account. b. Distribution of payroll checks to employees and approval of employee time cards. c. Posting of amounts from both the cash receipts and the cash disbursements journals to the general ledger. d. Writing checks to vendors and posting to the cash account. e. Recording cash receipts in the journal and preparing the bank reconciliation.arrow_forwardAn audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible fora. Examining authorization forms for new employees.b. Comparing payroll registers with original batch transmittal data.c. Authorizing payroll rate changes for all employees.d. Hiring all subordinate payroll department employees.arrow_forward
- Explain why each of the following combinations of tasks should or should no be separated to achieve adequate internal control. a. Approval of bad debt write-offs and the reconciliation of the AR subsidiary ledger and the GL Control Account. b. Distribution of payroll checks to employees and approval of employee time cards. c. Posting of amounts from both the cash receipts and the cash disbursement journals to the general ledger. d. Writing checks to vendors and posting to the cash account. e. Recording cash receipts in the journal and preparing the bank reconciliation. Please provide a clear explanation. *No plagiarism please*arrow_forwardWhich of the following situations is NOT a segregation of duties violation?a. The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine.b. The warehouse clerk, who has custodial responsibility over inventory in the warehouse, selects the vendor and authorizes purchases when inventories are low.c. The sales manager has the responsibility to approve credit and the authority to write off accounts.d. The department time clerk is given the undistributed payroll checks to mail to absent employees.e. The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account.arrow_forwardWhich of the following is not a generally recognized internal control activity? Oa. limiting access to computerized accounting records Ob. reducing the cost of hiring seasonal employees Oc. preparation of bank reconciliations on a monthly basis Od. establishment of clear lines of authority to carry out specific tasksarrow_forward
- Which of the following is a preventive control?a. Reconciliation of a bank account.b. Recalculation of a sample of payroll entries by internal auditors.c. Separation of duties between the payroll and personnel departments.d. Detailed fluctuation analysis completed by the CFO for revenue.arrow_forwardWhich internal control is not an important part of the payroll system? a. supervisors verify the accuracy of employee time cards b. paychecks are distributed by an independent paymaster c. the accounts payable department verifies the accuracy of the payroll register before transfer-ring payroll funds to the general checking account d. the general ledger department reconciles the labor distribution summary and the payroll disbursement voucherarrow_forwardWhich of the following reflects a weak internal control system? Please explain with full explanation. a. All employees are well supervised. b. A single employee is responsible for comparing a receiving report to an invoice. c. All employees must take their vacations. d. A single employee is responsible for collecting and recording cash.arrow_forward
- Control risk is the risk that a material misstatement in an account will not be prevented or detected on a timely basis by the client’s internal controls. The best controlto prevent or detect fictitious payroll transactions is to(1) use and account for prenumbered payroll checks.(2) obtain authorization from human resources for hiring, pay rate, job status andtermination.(3) verify internally authorized pay rates, computations, and agreement with thepayroll register.(4) conduct periodic independent bank reconciliations of the payroll bank account.arrow_forwardThe purpose of separating the duties of hiring personnel and distributing payroll checks is toseparate thea. Authorization of transactions from the custody of related assets.b. Operational responsibility from the record-keeping responsibility.c. Human resources function from the controllership function.d. Administrative controls from the internal accounting controls.arrow_forwardWhat is NOT an example of internal control procedures that help prevent payroll fraud? a.Outsource Payroll Administration b.Require mandatory vacations c.Make sure only one person handles payroll functions d.Conduct periodic unannounced auditsarrow_forward
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