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Payroll Substantive Procedures

The payroll substantive procedures involve agreeing payroll expenses to trial balances, casting payroll records to confirm completeness and accuracy, recalculating gross and net pay for a sample of employees, re-performing statutory deduction calculations, comparing expenses to prior years and investigating differences, reviewing monthly charges and discussing variances with management, performing a proof of total wages incorporating new hires and leavers, selecting samples of new hires and leavers to check start/end dates and pay, agreeing net pay to bank transfers and the cashbook, agreeing cash withdrawals to weekly wages paid, agreeing year-end tax liabilities to records and payments, and agreeing payroll to personnel records and hours worked.

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Jean Leong
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219 views

Payroll Substantive Procedures

The payroll substantive procedures involve agreeing payroll expenses to trial balances, casting payroll records to confirm completeness and accuracy, recalculating gross and net pay for a sample of employees, re-performing statutory deduction calculations, comparing expenses to prior years and investigating differences, reviewing monthly charges and discussing variances with management, performing a proof of total wages incorporating new hires and leavers, selecting samples of new hires and leavers to check start/end dates and pay, agreeing net pay to bank transfers and the cashbook, agreeing cash withdrawals to weekly wages paid, agreeing year-end tax liabilities to records and payments, and agreeing payroll to personnel records and hours worked.

Uploaded by

Jean Leong
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Payroll substantive procedures

– Agree the total wages and salaries expense per the payroll system to the detailed trial balance,
investigate any differences.

– Cast a sample of payroll records to confirm completeness and accuracy of the payroll expense.

– For a sample of employees, recalculate the gross and net pay and agree to the payroll records to verify
accuracy.

– Re-perform calculation of statutory deductions to confirm whether correct deductions for this year
have been included within the payroll expense.

– Compare the total payroll expense to the prior year and investigate any significant differences.

– Review monthly payroll charges, compare this to the prior year and budgets and discuss with
management any significant variances.

– Perform a proof in total of total wages and salaries, incorporating joiners and leavers and the pay
increase. Compare this to the actual wages and salaries in the financial statements and investigate any
significant differences.

– Select a sample of joiners and leavers, agree their start/leaving date to supporting documentation,
recalculate that their first/last pay packet was accurately calculated and recorded.

– For salaries, agree the total net pay per the payroll records to the bank transfer listing of payments
and to the cashbook.

– For wages, agree the total cash withdrawn for wage payments equates to the weekly wages paid plus
any surplus cash subsequently banked to confirm completeness and accuracy.

– Agree the year-end tax liabilities to the payroll records, and subsequent payment to the post year-end
cash book to confirm completeness.

– Agree the individual wages and salaries per the payroll to the personnel records and records of hours
worked per clocking in cards.

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