Question 1

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

Accepted Answer

A)   payments to employees are computed at authorized rates.
B)   employees work the number of hours for which they are paid.
C)   separation of duties exists between the preparation and distribution of the payroll.
D)   internal controls relating to unclaimed payroll checks are operating effectively.

Question 2

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

Accepted Answer

A) True 
 B)False

Question 3

Julie works in accounts payable.Her job is to prepare the voucher package and submit the completed voucher to the treasurer's office for payment.When the voucher is paid by the Treasurer's department it is returned to Julie (without the check)for filing.
The company receives invoices from Mona's Office Supply.When Julie receives the voucher package back from the Treasurer,Julie scans the invoice from Mona's Office Supply and changes the address so that a duplicate payment is sent to a Mail Boxes Etc.store where Julie rents a mail box under the name Mini's Official Supplies.With the slightly altered invoice (no other changes are made),Julie submits the voucher package a second time.Julie also has a bank account with the name Mini's Official Supplies.When Julie receives the check for Mona's Office Supply,Julie deposits it in her Mini's Official Supplies bank account and then used an ATM card to withdraw the cash.
A)Define the internal control weakness that allowed the situation to exist - if any;
B)One (and only one)specific internal controls that should be in place to prevent or detect the problem; and
C)One (and only one)test of control audit procedure.
D)One (and only one)substantive audit procedure that may detect the situation described.
No credit will be given for generic controls (e.g.policies and procedures; separation of duties without specifics; discuss with management).Be specific
Students may give any of the following
There is no mention of the voucher package being marked "Paid" or in some other way be marked so that documents cannot be reused.
Have the company mark each document "Paid" so they cannot be reused
• Observation of treasurer payment procedures
• Inquiry of the treasurer regarding payment procedures
• Inspect paid voucher packages for indication of payment on documents
• Scan cash disbursements journal for duplicate payments
• Perform analytical procedures on office supplies
• Check vendor payment addresses with mailbox stores' addresses
• Vouch payments to receiving reports and physical supplies

Accepted Answer

Weakness: Control: C...

Question 4

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________.
Question also found in study guide

Accepted Answer

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Question 5

The typical functions of the personnel and payroll cycle would not include

Accepted Answer

A)   labor relations.
B)   report of attendance and work performed.
C)   allocation to cost of goods sold.
D)   payroll accounting.

Question 6

The payroll department approves payroll hours prior to processing the payroll.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following procedures is least likely to be performed before the balance-sheet date?

Accepted Answer

A)   Observation of inventory.
B)   Review of internal control over cash disbursements.
C)   Search for unrecorded liabilities.
D)   Confirmation of receivables.

Question 8

Which of the following would be an indicator of potential fraud?

Accepted Answer

A)   Photocopies of invoices in the voucher file.
B)   Vendor invoices in numerical order.
C)   Vendors with only post office box addresses.
D)   All of the above indicate potential fraud.

Question 9

Which of the following fraud detection steps could not be performed by CAATs?

Accepted Answer

A)   Look for photocopies in invoice files.
B)   Look for vendor invoices in numerical order.
C)   Look for vendor invoices slightly below the approval threshold.
D)   Look for duplicate vendor numbers.

Question 10

"Recorded vouchers (accounts payable entries) in the voucher register (e.g.,purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

Accepted Answer

A)   Classification.
B)   Occurrence.
C)   Completeness.
D)   Cutoff.

Question 11

An audit team would most likely examine the detail support for which of the following charges?

Accepted Answer

A)   Payroll expense.
B)   Cost of goods sold.
C)   Supplies expense.
D)   Legal expense.

Question 12

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Accepted Answer

A)   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.

Question 13

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Accepted Answer

A)   clock cards.
B)   the voucher system.
C)   cash in bank.
D)   accrued payroll.

Question 14

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Accepted Answer

A)   cutoff tests indicate a substantial amount of accrued payroll expense.
B)   the assessed level of control risk relative to payroll transactions is low.
C)   analytical procedures indicate unusual fluctuations in recurring payroll entries.
D)   accrued payroll expense consists primarily of unpaid commissions.

Question 15

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Accepted Answer

A)   select vendor accounts with large balances.
B)   select vendor accounts at random in order to apply a statistical sampling procedure.
C)   select vendor accounts based on the number of purchases from vendors during the year.
D)   select vendor accounts that are past due.

Question 16

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Accepted Answer

A)   Property tax expense.
B)   Payroll expense.
C)   Research and development.
D)   Legal expense.

Question 17

A voucher package is used to

Accepted Answer

A)   document receipt of inventory.
B)   document completion of services.
C)   document a purchase contract.
D)   provide a source document for recording the purchase of a good or service.

Question 18

An entity's internal control structure requires for every check request that there be an approved voucher,supported by a prenumbered purchase order and a prenumbered receiving report.To determine whether checks are being issued for unauthorized expenditures,an auditor most likely would select items for testing from the population of all

Accepted Answer

A)   purchase orders.
B)   canceled checks.
C)   receiving reports.
D)   approved vouchers.

Question 19

The inherent risk that accounts payable may be omitted or otherwise understated typically is

Accepted Answer

A)   low.
B)   high.
C)   moderate.
D)   indeterminate.

Question 20

For the copy of the purchase order that goes to the receiving department,it is best to

Accepted Answer

A)   leave off the description of the goods ordered.
B)   leave off the quantity of the goods ordered.
C)   leave off the name of the vendor.
D)   have the receiving department forward all copies of the purchase order to accounts payable.

Exam 8: Acquisition and Expenditure Cycle

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Correct Answer
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Correct Answer
verified
Weakness: Control: C...
View Answer

Which of the following procedures is least likely to be performed before the balance-sheet date?

Correct Answer
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Which of the following fraud detection steps could not be performed by CAATs?

Correct Answer
verified

An audit team would most likely examine the detail support for which of the following charges?

Correct Answer
verified

For the copy of the purchase order that goes to the receiving department,it is best to

Correct Answer
verified

The payroll department approves payroll hours prior to processing the payroll.

Correct Answer
verified

Correct Answer
verified

A voucher package is used to

Correct Answer
verified

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

Correct Answer
verified

The typical functions of the personnel and payroll cycle would not include

Correct Answer
verified

A list of all purchases might exist only in a file rather than a _. Question also found in study guide

Correct Answer
verified
computer t...
View Answer

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Correct Answer
verified

"Recorded vouchers (accounts payable entries) in the voucher register (e.g.,purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

Correct Answer
verified

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

Correct Answer
verified

Which of the following would be an indicator of potential fraud?

Correct Answer
verified

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Correct Answer
verified

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Correct Answer
verified

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Correct Answer
verified

The inherent risk that accounts payable may be omitted or otherwise understated typically is

Correct Answer
verified

Exam 8: Acquisition and Expenditure Cycle

Auditors ordinarily ascertain whether payroll checks are properly endorsed during the audit of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedWeakness: Control: C...View AnswerShow Answer

Which of the following procedures is least likely to be performed before the balance-sheet date?

Correct AnswerverifiedShow Answer

Which of the following fraud detection steps could not be performed by CAATs?

Correct AnswerverifiedShow Answer

An audit team would most likely examine the detail support for which of the following charges?

Correct AnswerverifiedShow Answer

For the copy of the purchase order that goes to the receiving department,it is best to

Correct AnswerverifiedShow Answer

The payroll department approves payroll hours prior to processing the payroll.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A voucher package is used to

Correct AnswerverifiedShow Answer

An auditor vouched data for a sample of employees in a payroll register to approved clock card data to provide assurance that

Correct AnswerverifiedShow Answer

The typical functions of the personnel and payroll cycle would not include

Correct AnswerverifiedShow Answer

A list of all purchases might exist only in a ____________________________________ file rather than a _____________________________________. Question also found in study guide

Correct Answerverifiedcomputer t...View AnswerShow Answer

Which of the following accounts would most likely be audited in connection with a related balance sheet account?

Correct AnswerverifiedShow Answer

"Recorded vouchers (accounts payable entries) in the voucher register (e.g.,purchases journal) supported by completed voucher documentation" is a specific example of which management assertion?

Correct AnswerverifiedShow Answer

Auditors should inspect the "unmatched receiving report" file to determine whether the liability for the receipt of goods has been recorded.

Correct AnswerverifiedShow Answer

Which of the following would be an indicator of potential fraud?

Correct AnswerverifiedShow Answer

The auditor decided to test accounts payable by sending open-ended (blank) confirmations to selected vendors.The auditor's best approach in selecting the vendor accounts to confirm is to

Correct AnswerverifiedShow Answer

An auditor most likely would perform substantive procedures on payroll transactions and balances when

Correct AnswerverifiedShow Answer

An audit team most likely would assess control risk at the maximum if the payroll department supervisor is responsible for

Correct AnswerverifiedShow Answer

The inherent risk that accounts payable may be omitted or otherwise understated typically is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Weakness: Control: C...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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verified

A list of all purchases might exist only in a file rather than a _. Question also found in study guide

Correct Answer
verified
computer t...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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