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

Without paper clock cards, part of the audit trail has been altered, making it harder to track the accuracy and completeness of the employees' time records. The auditor must evaluate the reliability and effectiveness of the IT system and perform additional procedures to ensure that the data entered by employees is valid and the system-generated reports are accurate. While the computerized payroll time system may improve internal control and diminish the potential for payroll related fraud, these factors are not directly related to the audit trail issue.

During the Current Year Being Audited, Hitech, Inc