An auditor most likely would assess control risk at high if the payroll department supervisor is responsible for
A) Examining authorization forms for new employees.
B) Comparing payroll registers with original batch transmittal data.
C) Authorizing payroll rate changes for all employees.
D) Hiring all subordinate payroll department employees.

Question

Quizplus · Accepted Answer

If the payroll department supervisor is responsible for authorizing payroll rate changes for all employees, this represents a potential conflict of interest as they have the ability to increase their own pay or that of their friends and family. This increases the risk of errors, fraud, or abuse, which could lead to material misstatement in the financial statements. Therefore, an auditor would likely assess control risk to be high in this scenario. The other choices are not indicative of a high control risk.

An Auditor Most Likely Would Assess Control Risk at High