Question

An auditor traces a sample of electronic time cards before and after the bi-weekly payroll report and then traces to the payroll master file to determine that payroll transactions are reported in the correct period. The auditor is gathering evidence for which audit objective?

1) Completeness
2) Existence
3) Cut-off
4) Accuracy

Answer 1

The auditor is verifying the cut-off audit objective, ensuring payroll is recorded in the correct period.

Step-by-step explanation:

The auditor is gathering evidence for the cut-off audit objective. When an auditor traces a sample of electronic time cards to the bi-weekly payroll report and then to the payroll master file, they are ensuring that payroll transactions are reported in the correct accounting period. The auditor is checking that the timing of the recorded payroll expenses matches the actual work periods and that these are reported in the right financial periods, which is crucial for the accurate portrayal of a company's financial position at period end.

The auditor is gathering evidence for the audit objective of Cut-off.

Cut-off refers to the accuracy of recording transactions in the correct accounting period.

In this case, the auditor is tracing the electronic time cards before and after the payroll report to ensure that payroll transactions are reported in the correct period.