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 would provide the auditor with evidence of the effectiveness of the entity's policies and procedures for preventing and detecting occurrence assertion errors in payroll transactions. This is because a key control for occurrence assertion in payroll transactions is the separation of duties between those who approve time cards, those who prepare payroll, and those who authorize payments. Inspecting evidence of accounting for prenumbered payroll checks, recomputing payroll deductions, and verifying the preparation of the monthly payroll account bank reconciliation would be more relevant to other assertions, such as completeness or accuracy, rather than occurrence.

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