An Internal Audit Activity Implemented an Integrated Test Facility to Test

question 424

Multiple Choice

An internal audit activity implemented an integrated test facility to test payroll processing. The auditors identified the key controls and processing steps built into the computer program and developed test data to test them. The auditors submitted test transactions throughout the year and did not find any differences in their test results. The auditors can conclude that:

• A) The system is properly capturing the hours worked by employees during the year and the hours have been properly submitted to payroll and processed correctly.
• B) All employees were correctly paid during the year and their pay was correctly computed.
• C) The computer application and its control procedures were processing payroll transactions correctly during the past year.
• D) All of the above.

---

Definitions:

Normal Account Balance

The usual or expected balance that an account possesses, which can be a debit for assets and expenses, or a credit for liabilities, equity, and revenue.

Journal Entries

These are records that note the details of financial transactions in accounting, following the double-entry bookkeeping system.

Transactions On Account

Financial activities that are recorded on credit, affecting accounts payable or receivable without immediate cash exchange.

Equipment On Account

The acquisition of equipment that is recorded on credit, where payment is deferred to a later date.