Which of the following is the best reason why an auditor should consider observing an entity's distribution of regular payroll checks?
A)To ensure that names on the company payroll are those of bona fide employees presently on the job.
B)Total payroll costs are a significant part of total operating costs.
C)The auditor did not observe the distribution of the entire regular payroll during the audit in the prior year.
D)Employee turnover is excessive.

Question

Quizplus · Accepted Answer

By observing the distribution of regular payroll checks, the auditor can ensure that the names on the payroll are those of bona fide employees who are currently working for the entity. This helps to prevent fraudulent activity such as ghost employees or employees being paid for work they did not perform.

Which of the Following Is the Best Reason Why an Auditor