In determining the effectiveness of an entity's internal controls relating to the occurrence assertion for payroll transactions, an auditor most likely would inquire about and:
A.
Observe the segregation 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.
Suggested Answer:A🗳️
Choice "A" is correct. The occurrence assertion as it relates to payroll transactions would correspond to an audit objective to determine that payroll transactions actually occurred (i.e., that all payroll checks were issued to valid employees for hours actually worked). Segregation of duties between personnel and payroll departments is an important control to ensure that only valid employees receive paychecks. Choice "B" is incorrect. Inspecting evidence related to prenumbering of payroll checks would relate to the completeness assertion. Choice "C" is incorrect. Recomputing payroll deductions is a substantive test related to the accuracy assertion. Choice "D" is incorrect. Verifying the preparation of the monthly payroll account bank reconciliation would provide significant evidence for the accuracy assertion for payroll transactions.
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