You have just been assigned to the audit of Ferguson Manufacturing. You have been asked to help a new CPA who is performing audit data analytics using the client’s payroll file. The only analytic that has been performed thus far is calculating the reasonability of deductions as a percentage of gross wages for the 12 months of the year. The results were summarized in the following scatter chart:

Required

a. Provide an interpretation of the visualization. Include any notable items you identified in your interpretation, along with potential causes, and the steps you would take next.

b. Access the full dataset associated with the payroll records for the year 2020 in WileyPLUS. Complete the additional substantive tests on the data:
• Reasonability of wage rate by job title • Accuracy of the gross wage and net pay calculations

c. Create a working paper for the audit file that includes the following:
• Documented steps you performed • Your initial conclusions • Areas requiring further investigation

d. What did you document to meet documentation requirements?

Transcribed Image Text:

60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Months Deductions as a % of gross wages