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:

Static Planning Budget

A budget based on a fixed level of activity that does not change with actual levels of output, sales, or other activity measures.

Controlled Costs

Costs that can be influenced or managed by decisions made by managers or company officials.

Actual Costs

Actual costs refer to the genuine expenses incurred in the production, acquisition, or sale of products or services, including materials, labor, and overhead expenses.

Actual Level

The real, observed value or volume of output, production, or activity in a given period.