An auditor most likely would extend substantive tests of payroll when:
A)payroll is extensively audited by the state government.
B)payroll expense is substantially higher than in the prior year due to company growth.
C)overpayments are discovered in performing tests of details.
D)employees complain to management about too much overtime.

Question

Quizplus · Accepted Answer

The discovery of overpayments during tests of details indicates the possibility of material misstatements in the payroll. Therefore, the auditor would need to extend substantive tests of payroll to ensure the accuracy and completeness of payroll transactions. Options A, B, and D do not necessarily require the extension of substantive tests of payroll.

An Auditor Most Likely Would Extend Substantive Tests of Payroll