Question

What are the two major balance-related audit objectives in testing payroll liabilities?

1) Accuracy and detail tie-in
2) Completeness and valuation
3) Completeness and rights and obligations
4) Accuracy and cutoff

Answer 1

The two major audit objectives in testing payroll liabilities are completeness, which verifies that all payroll liabilities are recorded, and valuation, which confirms that they are recorded at the proper values.

Step-by-step explanation:

The two major balance-related audit objectives in testing payroll liabilities are completeness and valuation. Completeness ensures that all payroll liabilities that should have been recorded are indeed included in the financial statements. Valuation, on the other hand, ensures that these liabilities are recorded at the correct values according to the relevant accounting standards and principles. Auditing payroll liabilities is crucial for maintaining the accuracy of financial statements, which is part of the road-map to financial security. It ensures that the costs associated with employees, such as wages, taxes, and benefits, are properly recorded and ultimately reflect the financial health of a business.