Other audit procedures: payroll (1)

Question 1

Reconcile gross costs

Answer 1

Reconcile the gross costs on the payroll to wages cost in FSs

Question 2

Reperform payroll records

Answer 2

Reperform costs of payroll records to confirm completeness and accuracy of costs used as a basis for journals inFSs

Question 3

Confirm payment net pay

Answer 3

Confirm payment of net pay per payroll records to cheque or bank transfer summary

Question 4

Payroll unusual items

Answer 4

Inspect payroll for unusual items and investigat them further by discussion with management

Question 5

Perform proof-in-total multiple estimated average wage

Answer 5

Reperform proof-in-total (analytical procedures) on payroll by multiplying estimated average wage (using last year’s figures + expected increases) by average number of employees

Then compare figure in draft FSs to assess reasonableness

Question 6

Reperform statutory deductions

Answer 6

Reperform calculations of statutory deductions to establish whether valud deductions have been included in payroll expense

Question 7

Select sample of employees net pay

Answer 7

Select a sample of employees from the payrolland recalculate their gross and ent pay

Question 8

Select sample of employees payroll records

Answer 8

Select a sample of employees from payroll and agree their pay in payroll records to personnel records such as employment contracts

Question 9

Select sample of employees left organisation

Answer 9

Select a sample of employees who have joined or left the organisation during the year

Question 10

What should be agreed upon? (start/leave)

Answer 10

The employee’s start/leaving date to supporting documentation such as employment contract or resignation letter

Question 11

What should be ensured (added recalculate)

Answer 11

Employee has been added to/removed from payroll in the correct month. Recalculate payroll for month of joining/leaving to ensure its accuracy