AP - Payroll & Subsequent event

What are the general audit risk in respect of payroll

• Payroll has increased by X% and is out of line with the XX% increase in the number of employees
• *if there is number of … Payroll per gym has consequently reduced from PXXX to PYYY. Based on proof in total, the expected payroll should amount to PZZZ but PWWW was recorded in the payroll ledger. There is a risk of understatement
• Deficiencies were identified by the internal audit department prior to the outsourcing to …. • There is a high chance that the payroll figure was misstated in the 1st 6 months of the financial year
• Employee number has grown rapidly which increases the risk of errors
• Social security cost have decline from 11% to 9% of total payroll costs suggest an understatement

What are the general audit procedure for the risk in respect of payroll

• Evaluate and test control over payroll recording
• Recalculate on a sample basis for accuracy by vouching timesheets to confirm the number of hours worked by employee and the rate should be agreed to the employment contract
• On a sample basis, recalculate the payroll figure based on the employment contract and compare to the listing provided by outsource company for accuracy
• On a sample basis, vouch entries in the ledger to consultants invoice
• On a sample basis, recalculate payroll costs by agreeing the employment contract and payroll records

What are the general audit procedure for the risk in respect of payroll

• Compare monthly employee costs to identify anomalies
• On a sample basis, recalculate payroll costs by agreeing the employment contract and payroll records
• Ascertain the reasons from management for the decline in payroll costs and corroborate the reasons for reasonableness
• Review post year end payments made to consultants
• Read the internal audit report to ascertain the identified deficiencies and how it was resolved

What are the general audit procedure for the risk in respect of payroll

• Obtain detailed breakdown of payrolls details and cast to accuracy
• Determine if there was any pay rise during the year by reading the correspondence with employees
• Review post year end payments made to consultants
• Recalculate on a sample basis for accuracy by vouching timesheets to confirm the number of hours worked by employee and the rate should be agreed to the employment contract
• Ascertain the reasons from management for the decline in payroll costs and corroborate the reasons for reasonableness

What are the general audit procedure for the risk in respect of payroll

• Perform a proof in total by taking the average cost per employee and multiply with the number of employee for the current year
• Read the internal audit report to ascertain the identified deficiencies and how it was resolved
• Compare to post year-end invoices issued by consultants
• Evaluate and test control over payroll recording
• Compare monthly employee costs to identify anomalies

What are other potential audit risk in respect of payroll

• Unreliable system would result in errors in recording
• Delay in submitting the invoices by external consultants would result in cutoff errors
• Intentionally understated ............. as bonus is based on profit of the company
• Deficiencies highlighted by internal audit function were not resolved prior to outsourcing to company (increse chance of misstatement)
• Payroll system has not been updated increases chance of errors in recording

What are other potential audit risk in respect of payroll

• Payroll system has not been updated increases chance of errors in recording
• Accrued consultants' fees is an estimate which may be subjective and judgmental
• Bonus may have been overstated due to .....
• Accrued consultants' fees is an estimate which may be subjective & judgemental
• Delay in submitting the invoices by external consultants would result in cutoff errors

What are the audit procedure for the risk of Deficiencies highlighted by internal audit function were not resolved prior to outsourcing to company

• In respect of (outsourced) consider : Independance from client
• In respect of (outsourced) consider : request Type 1/2 report from client's external auditor
• In respect of (outsourced) consider : Read internal report & ascertain the nature of the deficiencies
• discuss with management on the basis used estimating the consultants' fees & consider the reasonableness
• Compare the post year end payment made to consultants

What are the audit procedure for the risk of Deficiencies highlighted by internal audit function were not resolved prior to outsourcing to company

• In respect of (outsourced) consider : any previous expereiance/reputation within the industry
• In respect of (outsourced) consider : on a sample basis, recalculate payroll based on employment contract to the listing provided by xlient to ensure accuracy
• In respect of (outsourced) consider : Recalculate prior to the transfer to client & trace to the payroll ledger
• Read the term of bonus in the employment contract & recalculate & ensure it is recorded in the ledger
• Read the terms of bonus in the employment contract and recalculate and ensure it is recorded in the ledger

What are the audit procedure for the risk of Accrued consultants' fees is an estimate which may be subjective and judgmental

• Discuss with management on the basis used in estimating consultants' fees and consider the reasonableness
• On a sample basis, vouch entries in the ledger to the consultants' invoices
• discuss with management on the basis used estimating the consultants' fees & consider the reasonableness
• Compare the post year end payment made to consultants
• Review post-year end payment for bonus