Once the auditor has determined the company's policy for accruing wages and knows it is consistent with that of previous years, the appropriate audit procedure to test for cutoff and accuracy is to:
A) compare the recorded accrued wages with the amount approved in the minutes of the board.
B) confirm the amount with employees.
C) compare the ledger balance with the journal and the tax form.
D) recalculate the client's accruals.

Question

Quizplus · Accepted Answer

The appropriate audit procedure to test for cutoff and accuracy in this case is to recalculate the client's accruals. This involves comparing the amounts recorded by the company with those calculated by the auditor based on the policy for accruing wages. This will ensure that the amounts are accurate and have been recorded in the correct period, which is important for financial reporting purposes. The other options (A, B, and C) do not specifically address the issue of testing for cutoff and accuracy of accrued wages.

Once the Auditor Has Determined the Company's Policy for Accruing