During the current year being audited, Hitech, Inc. changed from a conventional payroll punch clock to a computerized payroll time system. Factory employees now record time in and out with magnetic cards and the IT system automatically updates all payroll records. Because of this change
A) The auditor must audit through the computer.
B) Internal control has improved.
C) Without paper clock cards, part of the audit trail has been altered.
D) The potential for payroll related fraud has been diminished.

Question

Quizplus · Accepted Answer

As paper clock cards have been eliminated, part of the audit trail has been altered, which can make the audit process more challenging. The auditor will need to consider how to obtain and review electronic records, ensuring they are complete, accurate, and reliable. The other options are not necessarily true as the system change does not guarantee improved internal control or eliminate the potential for payroll fraud. The auditor still needs to test the new system to ensure that it's functioning correctly and effectively.

During the Current Year Being Audited, Hitech, Inc