In determining the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions,auditors most likely would inquire about and
A)Observe the separation of duties concerning personnel responsibilities and payroll disbursement.
B)Inspect evidence of accounting for prenumbered payroll checks.
C)Recompute the payroll deductions for employee fringe benefits.
D)Verify the preparation of the monthly payroll account bank reconciliation.

Question

Quizplus · Accepted Answer

Inquiring about and observing the separation of duties concerning personnel responsibilities and payroll disbursement is the most appropriate procedure to determine the effectiveness of an entity's policies and procedures relating to the occurrence assertion for payroll transactions. This helps ensure that the appropriate personnel are responsible for authorizing, recording, and disbursing payroll transactions, which reduces the risk of errors or fraud occurring. Inspecting evidence of accounting for prenumbered payroll checks and verifying the preparation of the monthly payroll account bank reconciliation may provide some assurance, but they are not as relevant to the occurrence assertion as inquiries and observations about separation of duties. Recomputing payroll deductions for employee fringe benefits relates more to the accuracy assertion than the occurrence assertion.

In Determining the Effectiveness of an Entity's Policies and Procedures