Payroll / salaries and wages

Normally there should not be many appointments and terminations, consequently audit work should concentrate on the maintenance of employees
and payments of salaries and wages.

Transaction life Risk Potential Control Assertion Audit test to be Performed

cycle Addressed
Appointment of Ghost employees Letter of appointment and Existence Tests of control:
personnel are included in the personnel file (including
personnel system copies of certificates) For a sample of new employees obtain the
personnel files. Inspect required supporting
Feedback from supervisor to documents for appointments, including
administration to confirm the information on the selection committee and
individual has commenced signed letter of appointment.
employment.
Evaluate whether the position has been filled in a
timely manner.
Payments of Salaries maybe paid Any amendments to Measuremen Tests of control:
salaries in duplicate, to standing salary information t, Accuracy
persons who are not (or salary master file) should For a sample of changes made to standing salary
on the payroll and at be properly authorized. information (for example salary increases),
incorrect amounts. confirm that changes were appropriately
Access to standing salary authorized.
information should be
restricted to authorized Substantive tests:
personnel.
For a sample of changes made to standing salary
information, inspect supporting documents and
confirm the validity of changes affected.

Salaries are paid at Completenes Tests of control:

correct amounts s,
Occurrence For selected payroll runs inspect proof that:
 The payroll information has been authorised
by an official independent of payroll
processing.
 Line managers have confirmed the payroll
details for their own departments.

In
Transaction life Risk Potential Control Assertion Audit test to be Performed
cycle Addressed
spect proof that there is regular and independent
reconciliations are performed between the
payroll and the financial system.

The employee records kept by line managers

are independently and regularly reconciled to the
HR department’s records (at least twice
annually).

Substantive tests:

For a sample of employee payments recorded in

the ledger:
 Compare the basic salary included to the
approved salary schedule.
 Verify that valid supporting documents exist
for all additional salary inputs including
overtime payments, leave pay, incentives,
bursaries, travel claims, subsistence claims,
loan repayments, garnishee orders, etc.
 Confirm that all additional salary inputs are
properly authorised by the line manager
before the payroll run.
 Confirm that salary deductions have been
properly calculated
 Statutory payments have been appropriately
made.
 Recalculate salary amounts.

For a sample of employees on the payroll

physically verify the existence of the employees.
Where this procedure is not practical, confirm
whether that the selected employee(s) had take
leave during the past year. Where no leave
transactions have been noted further follow-up
may be necessary to verify the existence of the
employee.
Transaction life Risk Potential Control Assertion Audit test to be Performed
cycle Addressed

Termination of Terminated, retired System verification of all Validity Substantive tests:

employment employees are paid staff over retirement age
after finishing For a sample of terminations examine personnel
service Policies to ensure non files and determine whether:
attendance is taken up by  The termination was processed within a
the supervisor reasonable time or at least before the next
payment of salaries.
Standard procedures for  The file represents reasonable
informing personnel to documentation including leave application,
inform finance sick sheets, promotion information, training
requirements, etc.
 Inspect documentation to confirm that the
employee was excluded from the subsequent
salary run.