Question

In auditing payroll, which of the following procedures will normally require the least amount of auditor time under normal circumstances?

1) Tests of controls
2) Substantive tests of transactions
3) Analytical procedures
4) Tests of details of balances

Answer 1

In auditing payroll, analytical procedures normally require the least amount of auditor time because they provide a high-level review of data to identify any significant changes or anomalies quickly, as opposed to more detailed and time-intensive tests like tests of controls, substantive tests of transactions, and tests of details of balances.

Step-by-step explanation:

When auditing payroll, the procedure that will normally require the least amount of auditor time under normal circumstances is analytical procedures. This is because analytical procedures involve a high-level review of the data to spot any inconsistencies or significant unexpected fluctuations that may indicate errors or fraud. These procedures compare current year figures to those of prior periods, budgets, and industry standards to quickly identify any areas that may need more investigation.

In contrast, tests of controls and substantive tests of transactions can be more time-consuming, as they often involve a more detailed examination of the payroll transactions and the controls surrounding them. Tests of details of balances are also time-intensive because they require a thorough inspection of the details within the payroll balances to verify their accuracy and completeness.

However, the extent of the auditing procedures required can vary based on the auditor's assessment of the risk of material misstatement as well as the effectiveness of the entity's internal controls.

Answer 2

In auditing payroll, analytical procedures normally require the least amount of auditor time because they provide a high-level review of data to identify any significant changes or anomalies quickly, as opposed to more detailed and time-intensive tests like tests of controls, substantive tests of transactions, and tests of details of balances.

Step-by-step explanation:

When auditing payroll, the procedure that will normally require the least amount of auditor time under normal circumstances is analytical procedures. This is because analytical procedures involve a high-level review of the data to spot any inconsistencies or significant unexpected fluctuations that may indicate errors or fraud. These procedures compare current year figures to those of prior periods, budgets, and industry standards to quickly identify any areas that may need more investigation.

In contrast, tests of controls and substantive tests of transactions can be more time-consuming, as they often involve a more detailed examination of the payroll transactions and the controls surrounding them. Tests of details of balances are also time-intensive because they require a thorough inspection of the details within the payroll balances to verify their accuracy and completeness.

However, the extent of the auditing procedures required can vary based on the auditor's assessment of the risk of material misstatement as well as the effectiveness of the entity's internal controls.