(c) payroll substantive procedures – agree the total wages and salaries expense per the payroll system to the trial balance, investigate any differences – cast a sample of payroll records to confirm completeness and accuracy of the payroll expense. Figure 104 audit programme for substantive tests of production wages (troston plc) troston plc year ended 31 december 2010 objectives are to determine: l that the money paid out by the company for production wages and related costs and described as such in the financial accounting and costing records reached the persons for whom it was intended. • analytical procedures – payroll turnover ratio comparing with previous month’s salary – production cost comparing with the number of units produced comparing with the previous month’s cost of production nature of substantive procedures substantive analytical procedures are applied on large volume of transactions, which are.
This feature is not available right now please try again later. Substantive testing is an audit procedure that examines the financial statements and supporting documentation to see if they contain errors these tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate. Substantive tests of account balances in the payroll cycle are likely to include the following procedures except a analytical review procedures b recalculation of accruals. Substantive procedures for cash outflow irregularities substantive procedures for cash outflow irregularities apollo shoes has recognized that there is a risk of loss due to irregularities in cash outflows, accounts payable, and payroll.
Substantive procedures defined a substantive procedure is a process, step, or test that creates conclusive evidence regarding the completeness, existence, disclosure, rights, or valuation (the. Analytical procedures performed during an engagement also contribute substantive evidence to enable auditors to evaluate financial statement assertions for payroll and operating expenses i have prepared an illustrative small audits analytical procedures program that is available upon request through the contact us tab on my website. Analytical procedures 497a11 substantive analytical procedures are generally more effective for largevolumesoftransactionsthattendtobepredictableovertimetheappli. Audit procedures included identifying payroll processing risks, performing tests to verify the effectiveness of internal controls, interviewing personnel and reviewing support documentation to verify compliance with federal and state regulations and university.
(b) 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. Substantive procedure – select a sample of employees from the payroll and vouch to individual contracts of employment in hr department to ensure that all wages are authorised test of control – review overtime forms/lists for authorised signatures. Payroll audit june 30, 2014 audit report 201314-11 executive summary regulations, policies, and procedures as they relate to members and applicants the department’s office of payroll services is responsible for payroll staff to conduct spot checks on retroactive payments and leave payouts to.
Overview substantive testing or substantive procedure is the technique use by auditor to obtain the audit evidence in order to support auditor opinionsubstantive testing is part of substantive audit approach and it is performing at the execution stage of audit it is different to test of control. It gives the payroll clerks two weeks from receiving the timecards to enter payroll items, investigate any weird reporting, run paychecks, and get them signed (or, in the case of electronically paid employees, get the payroll amounts approved. Payroll check payroll bank account reconciliation w-2 form payroll tax returns understand internal control – payroll and personnel audit procedures sample size items to select timing assess planned control risk – payroll and personnel determine extent of testing controls design tests of controls and substantive tests of transactions for.
My go-to substantive procedure is to reconcile payroll to 941s i also review payroll withholding accounts, and i recompute the salary accrual finally, if merited, i perform fraud-related payroll procedures look for my next post in the why and how of auditing next week we’ll look at how to audit debt. Design & perform tests of controls & substantive tests of transactions for the payroll and personnel cycle design & perform analytical procedures for the payroll and personnel cycle design tests of details of payroll accounts balances to satisfy balance-related audit objectives. Using the payroll example above – an example of a substantive test would be the auditor selecting a sample of employees paid in the year, and agreeing amounts paid to the payslips and bank statements. Topic 44: substantive procedures wages & salaries although auditors may test other expenses solely by analytical review, they may carry out more detailed testing on wages and salaries, partly because of the consequences of failure to deduct income tax correctly.
Substantive procedures are intended to create evidence that an auditor assembles to support the assertion that there are no material misstatements in regard to the completeness, validity, and accuracy of the financial records of an entity thus, substantive procedures are performed by an audit. Substantive payroll procedures (l-4) the figures match for payroll on the payroll register and the ending number for the year on the trial balance the current year numbers compared to last year numbers are reasonable the key executive salaries compared to those authorized in the board minutes are reasonable. The auditor tests the controls over the payroll cycle and then performs substantive analytical procedures over the related expense accounts three characteristics: a significant number of payroll transactions are processed in a routine way during the period.
This procedure, considered along with other risk assessment procedures, can provide substantive evidence that enables the auditor to plan an audit strategy that reduces tests of balances procedures. And you can perform that auditing by substantive detail testing (ie: make selection, obtain invoice, payment support, etc) or substantive analytical procedure as described above (ie: payroll, with 100 employees in the prior year payroll expense was $5,000,000, with 110 employees the current year we expect payroll to be $5,500,000 and compare. Performance of substantive tests will help to find any errors or misstatements within the accounts or documentation associated with the revenue cycle payroll audit procedures audit.