Question

If an auditor wishes to test the completeness transaction-related audit objective in the payroll and personnel cycle, which of the following would be a reasonable test of control?

1) Account for a sequence of payroll checks.
2) Examine the procedures manual and observe the recording of transactions.
3) Examine the payroll records for indication of pay rate approval.
4) Reconcile the payroll bank account.

Answer 1

A reasonable test of control for the completeness audit objective in payroll is to account for the sequence of payroll checks, ensuring there are no gaps that might indicate unrecorded transactions.

Step-by-step explanation:

If an auditor wishes to test the completeness transaction-related audit objective in the payroll and personnel cycle, a reasonable test of control would be to account for a sequence of payroll checks. This method involves reviewing the numeric sequence of payroll checks to ensure that there are no missing checks, which could indicate unrecorded transactions. The primary concern here is to verify that all payroll transactions that should have been recorded are indeed reflected in the payroll records.

Other methods listed, such as examining the procedures manual, investigating pay rate approval, or reconciling the payroll bank account, serve different audit objectives. For example, reconciling the bank account would be more relevant to the accuracy or existence objective, rather than completeness.