When Auditing the Human Resources and Payroll Cycle,the Auditor Should

question 38

Multiple Choice

When auditing the human resources and payroll cycle,the auditor should verify the officers' compensation because

• A)officers are more likely to commit fraud.
• B)officers' compensation is likely more prone to error.
• C)some officers may have complex compensation packages.
• D)some officers may be in a position to pay themselves more than the authorized amounts.

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Definitions:

Accounting Equation

The fundamental principle of accounting that states Assets = Liabilities + Equity, which must always be in balance for accurate financial reporting.

Net Income

Net income is the total profit of a company after all expenses, including taxes and operational costs, are subtracted from its total revenue.

Total Liabilities

The sum of all financial obligations a company has to external parties, including both short-term and long-term debts.

Accounting Equation

The fundamental formula in accounting that states assets equal liabilities plus equity (Assets = Liabilities + Equity).