Which of the Following Audit Procedures Would Be the Most

question 56

Multiple Choice

Which of the following audit procedures would be the most effective in testing for nonexistent employees?

• A) Trace transactions recorded in the payroll journal to the human resources department to determine employment status.
• B) Examine cancelled checks for proper endorsement.
• C) Recalculate net pay.
• D) Reconcile the disbursements in the payroll journal with the disbursements on the payroll bank statement.

---

Definitions:

Expected Return

The anticipated profit or loss of an investment, calculated by taking the average of possible returns weighted by their probabilities.

Economic Scenarios

Hypothetical projections used in financial planning and economic modelling to understand the potential impacts of various macroeconomic conditions or policy changes.

Probability

A measure of the likelihood of a specific outcome or event occurring, often expressed as a percentage or a ratio.

Systematic Risk

Also known as market risk, it refers to the risk inherent to the entire market or market segment and cannot be eliminated through diversification.