A Surprise Observation by an Auditor of an Entity's Regular

question 57

Multiple Choice

A surprise observation by an auditor of an entity's regular distribution of paychecks is primarily designed to satisfy the auditor that:

• A)all unclaimed payroll checks are properly returned to the cashier.
• B)the paymaster is not involved in the distribution of payroll checks.
• C)all employees have in their possession proper employee identification.
• D)names on the company payroll are those of bona fide employees presently on the job.

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, intended to standardize and simplify transactions.

Primarily Liable

Liable for paying the amount designated on an instrument when it is presented for payment.

Defaults

A failure to fulfill an obligation, especially to repay a loan on time.

Holder in Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus has certain protections.