Fundamental Payroll Certification Fundamental Payroll Audits and Record Retention 4

Question 1

An auditor selects a sample of payroll checks and traces them back to approved timesheets and pay rates. This procedure is known as:

Accepted Answer

Vouching

Answer

Vouching involves working backward from the output (checks) to source documents (timesheets, pay rates) to verify existence and authorization.

Question 2

Which payroll document must be retained for 4 years per IRS guidance and includes evidence of tax deposits made?

Accepted Answer

Employment tax records including deposit records

Answer

IRS Publication 15 requires employment tax records, including proof of tax deposits, to be kept for at least 4 years after the tax due date or payment date.

Question 3

A company conducts a pay equity audit and finds that female employees in identical roles earn 15% less than male counterparts without documented justification. What is the primary legal risk?

Accepted Answer

Potential liability under the Equal Pay Act and Title VII

Answer

Unjustified pay disparities based on gender expose employers to claims under the Equal Pay Act and Title VII of the Civil Rights Act.

Question 4

Which of the following best describes a 'payroll register'?

Accepted Answer

A detailed record showing each employee's gross pay, deductions, and net pay for a pay period

Answer

The payroll register is the primary payroll document listing earnings, deductions, and net pay for each employee per pay period.

Question 5

An employer uses electronic timekeeping. During a payroll audit, which control should auditors verify to ensure data integrity?

Accepted Answer

That system access is restricted and all time edits are logged with user ID and timestamp

Answer

An audit trail of all edits, including who made changes and when, is the key internal control for electronic timekeeping integrity.

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Practice Test

Fundamental Payroll Certification Fundamental Payroll Audits and Record Retention 4