From an audit perspective, transactions are far more significant than related balance sheet accounts in the payroll and personnel cycle.

Question

Quizplus · Accepted Answer

Transactions in the payroll and personnel cycle, such as employee hiring, termination, timekeeping, and payroll processing, are more likely to be subject to errors or fraud, which could result in material misstatements in the financial statements. Therefore, auditors typically focus on testing transactions and controls in this cycle to ensure the accuracy and completeness of payroll expenses and related liabilities. While balance sheet accounts such as salaries payable and accrued payroll taxes are also important, they are often derived from underlying transactions and thus require a reliable transaction processing system to be correctly stated.

From an Audit Perspective, Transactions Are Far More Significant Than