An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to:

Question

Quizplus · Accepted Answer

Choice "D" is correct. An auditor reviews the reconciliation of payroll tax forms that a client is responsible for filing in order to identify potential liabilities for unpaid payroll taxes. Choice "A" is incorrect. Payroll deductions are verified by inspecting the payroll register and, for a sample of employees, tracing deductions back to employee authorization forms held in the personnel department. Choice "B" is incorrect. Review of the reconciliation of payroll tax forms is a substantive test that would not indicate whether internal control activities with respect to payroll are operating effectively. Choice "C" is incorrect. Review of the reconciliation of payroll tax forms would not uncover fictitious employees. The auditor would need to observe payroll distribution (or examine direct deposits) to ensure that all personnel being paid are actually employed by the company.

An Auditor Reviews the Reconciliation of Payroll Tax Forms That