Are any time lags in recording economic events typically experienced in payroll systems? If so, what are they? Discuss the accounting profession's view on this matter as it pertains to financial reporting. The management of an organisation with a remote workforce is concerned that employees are clocking on for others who are not actually at work. What controls would reduce this risk?

Are any time lags in recording economic events typically experienced in payroll systems? If so, what are they? Discuss the accounting profession's view on this matter as it pertains to financial reporting. The management of an organisation with a remote workforce is concerned that employees are clocking on for others who are not actually at work. What controls would reduce this risk?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.
Give an example of how a CFO or Controller can fraudulently manipulate financial statements through the use of journal entries. Separately, give an example of a financial reporting practice that is subject to management estimates e.g. fair value measurements of assets, goodwill, transfer pricing - and discuss internal controls that can reduce the opportunities for unethical behavior.
Why is it important for companies to analyze revenue and accounts receivable? How can these areas lend themselves to fraud when left with lack of segregation of duties, weak controls and recordkeeping delays?
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Provide an appropriate response based on the following scenarios. Assume that the accounting clerk posts a customer’s payment for the wrong amount, giving the customer credit for less than he or she actually paid. How will this error be detected? How might this error have been prevented? Assume that the employee who opens the mail steals a customer payment. How will this theft be detected? How might this theft have been prevented?
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Two very common ways that employees commit fraud against their employers is the misstatement of reimbursable expense accounts and the misuse of office supplies for personal purposes. Although these schemes are usually not individually significant, their magnitude can be damaging if these practices are widespread. Please comment on these types of fraud (and other examples of employee fraud) and what internal controls they would put in place in an organization to curb this activity.
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What are the most frequent mistakes and scams that occur in the payroll and personnel processes?? In order to avoid or discover these blunders and scams, what are auditors searching for?