Peter has the task of designing the audit program for the payroll area. There have been no
Question:
Peter has the task of designing the audit program for the payroll area. There have been no recent changes to the payroll system, or its interface with the general ledger. Among other tests, Peter is considering using the following analytical procedures to gather evidence:
1. Compare payroll tax expenses to the annual payroll times the statutory tax rates.
2. Compare the relationship between direct labour costs and number of employees with prior periods.
Required
(a) Discuss the type of evidence which would be obtained from each of the procedures.
(b) Would your answer be any different if there had been recent changes to the payroll system? Explain.
Step by Step Answer:
Auditing A Practical Approach
ISBN: 9780730364573
3rd Edition
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton