An Auditor Plans to Examine a Sample of 20 Checks

question 9

Multiple Choice

An auditor plans to examine a sample of 20 checks for countersignatures as prescribed by the entity's internal control procedures. One of the checks in the chosen sample of 20 cannot be found. The auditor should consider the reasons for this limitation and

• A) Evaluate the results as if the sample size had been 19.
• B) Treat the missing check as a deviation for the purpose of evaluating the sample.
• C) Treat the missing check in the same manner as the majority of the other 19 checks (i.e., countersigned or not).
• D) Choose another check to replace the missing check in the sample.

---

Definitions:

Payroll Taxes Payable

Liabilities owed to tax authorities for employee taxes withheld and employer payroll taxes; to be paid within a specified period.

FUTA Payable

A liability account reflecting the federal unemployment tax due to the government by employers.

Wages and Salaries Expense

The cost incurred by a business to compensate its employees for their work, typically noted in the income statement.

Payroll Tax Expense

Total taxes, both employer and employee portions, associated with wages and salaries, including federal, state, and other payroll taxes.