Ch10 Solutions - 1Chapter 10 - Section 404 Audits of...

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1Chapter 10 - Section 404 Audits of Internal Control and Control Risk Multiple Choice Questions From CPA Examinations 10-31 a. (3) b. (3) c. (4) d. (4) 10-32 a. (3) b. (2) c. (4) 10-33 a. (3) b. (4) c. (4) d. (2) 10-34 1. a. Adequate segregation of duties and proper authorization of transactions and activities. b. Recorded transactions exist. c. An unauthorized or invalid time card turned in by an existing employee. The time card may be for an employee who formerly worked for the company or one who is temporarily laid off. d. An employee could be claiming too many hours by having a friend punch him or her in early, or by making manual changes on time cards. e. Check to see that all employees that are punched in one day are physically present. 2. a. Adequate documents and records. b. Existing transactions are recorded. c. A missing time card number never could be identified before preparation of payroll starts. d. An employee would not be paid for a time period. (The employee is almost certain to bring this to management's attention.) The primary benefit of the control would be to prevent misstatements for a short period of time and to prevent employee dissatisfaction from failure to pay them. e. Obtain a list of company employees and make sure that each one has received a paycheck for the time period in question. 10-34 , continued 3. a. Proper authorization of transactions and activities. b. Recorded transactions exist. c. A paycheck cannot be processed for an invalid employee number. d. A fictitious payroll check could be processed for a fictitious employee if invalid employee numbers are included in the employee master file. e. Include test data transactions with invalid employee numbers in the data to be inputted into the payroll accounting system and determine that all invalid transactions are automatically rejected by the software application. 4. a. Adequate separation of duties. b.
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This note was uploaded on 06/24/2011 for the course ACCOUNTING 424 taught by Professor Smith during the Spring '11 term at UNC Charlotte.

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Ch10 Solutions - 1Chapter 10 - Section 404 Audits of...

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