Carla Andress is the auditor of Alexis Company, Ltd., a large manufacturing company with several plants across Canada. The company has used EDP equipment since 19X3 to process most of its accounting information and presently has two third-generation computers at its head office. In prior years, Alexis Company, Ltd. had never recorded accrued vacation pay in its accounts but instead had recognized the expense when vacations were taken by the employees. For the year ended December 31, 19X5, however, the company decided to set up the liability at that date for accrued vacation pay. The company employs approximately 2,400 employees, each of whom belongs to one of four unions. Employees' entitlement to vacation pay is based on length of service (calculated from the month of employment) and varies according to the terms of each union contract. Complete personnel information for all employees is maintained on a payroll master file tape which is updated daily. An "Employee Status Report" containing all master file details for specified employees is produced daily on a request basis.

A specially written computer program was used to determine the amount of accrued vacation pay. This program extracted the relevant data from the payroll master file tape as at December 31, 19X5, calculated the amount of accrued vacation pay for each employee, recorded the details on an output tape, and printed a summarized report showing only the grand total of the accrued vacation pay.

1. How would an audit trail be provided to enable Andress to perform tests of the details of the accrued vacation pay? What practical difficulties may arise?

2. Explain how Andress could use test data to test the computer program.