Exam 15: Audit of the Human Resources and Payroll Cycle

You have been working on the audit of Ballistic Defence Company for several years now. There are about 15 000 employees working at the company in various positions. Recently, the company contracted for a new customized payroll system, which is to be implemented next month. You have been asked to assess the acceptance testing plan that is being prepared by accounting staff. In particular, they want you to help assess controls that will improve the accuracy of information entered into the new computer system. The company uses mainframe computing systems. Assume that the typical payroll information is available on computer files (i.e., employee number, employee name, social insurance number, department code, payment type code (salaried or hourly), time worked, wage rate, gross pay, deductions (by type), net pay, and cheque number). Required: Identify the tests that should be conducted by the company's accounting staff with respect to accuracy before accepting the software.

The auditor's primary concern in testing payroll liabilities is to make sure that

Which of the following is a test of controls?

Which of the following internal control tests would help to assess whether payroll transactions were recorded on the correct dates?

Which of the following controls could help to prevent unauthorized overtime?

"Recorded payroll transactions are for the amount of time actually worked and at the proper pay rate; withholdings are properly calculated" relates to which control objective?