An Auditor Decides That It Is Important and Necessary to Observe

question 8

Multiple Choice

An auditor decides that it is important and necessary to observe a client's distribution of payroll cheques on a particular audit. The client organisation is so large that the auditor cannot conveniently observe the distribution of the entire payroll. In these circumstances, which of the following is most acceptable to the auditor?

• A) Observation should be made for all departments regardless of the inconvenience.
• B) Observation should be limited to one or more selected departments.
• C) Observation should be limited to those departments where employees are readily available.
• D) Observation should be eliminated and other alternative auditing procedures should be utilised to obtain satisfaction.

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Definitions:

Seasonal Pattern

Variation in behaviors, emotions, or processes that occur as a response to the change of seasons.

Survey

A descriptive technique for obtaining the self-reported attitudes or behaviors of a particular group, usually by questioning a representative, random sample of the group.

Seasonal Pattern

A cyclic variation in behavior, mood, or patterns of activity influenced by changes in the seasons or weather conditions.

Depressive Disorder

A mind-related disorder characterized by a never-ceasing state of depression or absence of enthusiasm for activities, largely affecting life's daily operations.