Which of the following is important for the auditor to understand before proceeding with an audit of the payroll process?
A)Knowledge of whether the entity is labor or capital intensive
B)The nature of compensation (hourly vs.salaried)
C)The importance of bonuses or other compensation arrangements
D)All of the answer choices are correct.

Question

Quizplus · Accepted Answer

All of the answer choices are important for the auditor to understand before proceeding with an audit of the payroll process. Knowledge of whether the entity is labor or capital intensive is important for understanding the overall impact of payroll expenses on the entity's financial statements. The nature of compensation (hourly vs. salaried) is important for understanding the calculations involved in payroll and for testing the accuracy of those calculations. The importance of bonuses or other compensation arrangements is important for ensuring that these types of compensation are properly accounted for and disclosed in the financial statements.

Which of the Following Is Important for the Auditor to Understand