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[SAPP] AA Revision_substantive Procedures Payroll

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[SAPP] AA Revision_substantive Procedures Payroll

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Copyright
© © All Rights Reserved
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REVISION AUDIT PROCEDURE THEORY

Marks will be allocated:


• 0.5 marks to activity performed by auditor (correct action verb and correct audit evidence)
• 0.5 marks to objective of activity

Section Substantive procedures Guidance

Payroll system  Perform analytical procedures such as proof in total by using number of employees
and average wage and investigate any significant fluctuation.
 Carry out month by month comparisons of total wages with prior year/budgets and
investigate differences.
 Select a sample of employees from the payroll and agree hours paid to individual clock
cards to ensure that employees are only paid for work done.
 Select a sample of employees from the payroll and vouch to individual contracts of
employment in HR department to ensure that wages are only paid to valid employees.
 Compare overtime costs each month with the prior year and investigate significant
variances to ensure that overtime paid is for additional hours required by the business.
 Obtain printout of employee wage rates and compare to HR records to ensure wages
are paid at the correct rates of pay.
 Select a sample of employees and reperform calculations of gross and net pay to
ensure that errors do not occur in payroll calculations.
 Agree total wages and deductions per selected payrolls to the amounts recorded in
the individual general (nominal) ledger accounts to ensure the accuracy of the payroll
amounts.
 Agree sundry payables for tax outstanding at the year end to the payroll records and
check subsequent payment to cash book to ensure the accuracy of the payroll records.

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