Which of the following is the best reason why the auditors should consider observing a client's distribution of regular payroll checks?
A)Separation of payroll duties is less than adequate for effective internal control.
B)Total payroll costs are a significant part of total operating costs.
C)The auditors did not observe the distribution of the entire regular payroll during the audit in the prior year.
D)Employee turnover is excessive.

Question

Quizplus · Accepted Answer

Observing the distribution of regular payroll checks can help auditors assess whether the separation of payroll duties is adequate for effective internal control. This is because observing the distribution can help auditors ensure that the payroll function is being carried out in a way that reduces the risk of errors or fraudulent activity, such as the creation of ghost employees or the issuance of duplicate paychecks. Therefore, option A is the best reason for auditors to consider observing a client's distribution of regular payroll checks.

Which of the Following Is the Best Reason Why the Auditors