A surprise observation by an auditor of an entity's regular distribution of paychecks is primarily designed to satisfy the auditor that:
A)all unclaimed payroll checks are properly returned to the cashier.
B)the paymaster is not involved in the distribution of payroll checks.
C)all employees have in their possession proper employee identification.
D)names on the company payroll are those of bona fide employees presently on the job.

Question

Quizplus · Accepted Answer

The surprise observation of the distribution of paychecks is primarily designed to verify that the names on the company's payroll are those of actual employees currently working for the entity. This helps to prevent payroll fraud, where fictitious employees may be added to the payroll, or employees who have left the organization are still receiving paychecks. The other options listed (A, B, and C) are also important control measures but do not directly relate to the purpose of this particular observation.

A Surprise Observation by an Auditor of an Entity's Regular