When examining payroll transactions, an auditor is primarily concerned with the possibility of
A) incorrect summaries of employee time records.
B) overpayments and unauthorized payments.
C) under withholding of amounts required to be withheld.
D) posting of gross payroll amounts to incorrect salary expense accounts.

Question

Quizplus · Accepted Answer

When examining payroll transactions, the auditor is primarily concerned with the possibility of overpayments and unauthorized payments, as this can lead to fraudulent activity and material misstatement in the financial statements. While incorrect summaries of employee time records, under withholding of amounts required to be withheld, and posting of gross payroll amounts to incorrect salary expense accounts are also potential issues, they do not pose as significant of a risk as overpayments and unauthorized payments.

When Examining Payroll Transactions, an Auditor Is Primarily Concerned with the Possibility