CPM Payroll Audit & SOX Controls 5

Question 1

A payroll auditor is performing a 'floor-to-register' test by starting with a list of employees who badged into the building and tracing them to the payroll register. Which audit assertion is this test primarily designed to address?

Accepted Answer

Completeness

Answer

A floor-to-register test moves from a physical population to the records, testing completeness — that all employees who worked are included in payroll.

Question 2

A 'register-to-floor' payroll audit test starts with the payroll register and traces selected employees to confirm they are real, active employees. This test primarily addresses which assertion?

Accepted Answer

Existence/occurrence

Answer

Starting from the register and confirming employees exist (are real, active people) tests the existence/occurrence assertion — ensuring recorded payees are legitimate.

Question 3

Which of the following best describes a 'walk-through' in the context of a SOX payroll audit?

Accepted Answer

Tracing a single transaction from initiation through recording to confirm the auditor's understanding of the control process

Answer

A walk-through follows one transaction end-to-end through the process to confirm the auditor's understanding of how the control actually operates.

Question 4

A company grants stock options to executives as part of their compensation. Under SOX and related SEC rules, executives must report changes in beneficial ownership of company securities within:

Accepted Answer

2 business days of the transaction

Answer

SOX Section 403 accelerated the reporting deadline for insider transactions to 2 business days, filed electronically on Form 4.

Question 5

An auditor reviewing a company's SOX payroll controls finds no written policies for how payroll adjustments and manual checks are authorized. Which COSO component is most deficient?

Accepted Answer

Control Activities

Answer

Control Activities include the policies and procedures that ensure management directives are carried out; lack of documented authorization policies is a deficiency in this component.

(CPM) Certified Payroll Manager Practice Test

(CPM) Certified Payroll Manager Practice Test

CPM Payroll Audit & SOX Controls 5