Chuck and Co Your role You are the auditor and are in the process of reviewing...

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Chuck and Co Your role You are the auditor and are in the process of reviewing systems testing completed on the payroll cycle as well as preparing the audit programme. Client information Chuck and Co are manufactures; they manufacture lights. Process is predominately automated, they employee: - 85 employees who monitor the machines - 50 employees who work in sales and administration - The company manufacture 27/7. Factory workers - Company operates three shifts every day Each shit is 8 hours long - Employees are required to clock in and out using the swipe card and links to the hours work, once clocked out, report produced by the computerised payroll system and employees paid on the basis of the hours worked. No process for monitoring the clocking in and out. And, an employee was seen clocking in several employees using the employees swipe cards Payroll department calculates the wages on a weekly basis; based on the reported hours worked multiplied by the hourly wage rate and taking into account appropriate tax deductions CASE STUDY No one checks these calculations During the year hourly wage rate was increase and HR notified the payroll department Each Friday payroll prepares the wage packets and physically hands these to the employees but for the night shift workers, the pay packets are given to the supervisor to distribute. And, if any worker is absent for the night shift, the supervisor returns the payback to the payroll on Monday morning. Sales and administration staff Sales and admin staff are paid monthly via bank transfer Employee numbers during the year can fluctuate due to leavers and starts and HR is slow in passing this information to payroll Redundancies During the year the company decided to outsource the sales ledger department and as a result 14 employees were made redundant. A redundancy provision, which is material, will be included in the draft accounts. Required a) Describe the substantive procedures you should perform to confirm the accuracy and completeness of Chuck and Co payroll figure. b) Describe the substantive procedures you should preform to confirm the redundancy provision at the year end. Chuck and Co Your role You are the auditor and are in the process of reviewing systems testing completed on the payroll cycle as well as preparing the audit programme. Client information Chuck and Co are manufactures; they manufacture lights. Process is predominately automated, they employee: - 85 employees who monitor the machines - 50 employees who work in sales and administration - The company manufacture 27/7. Factory workers - Company operates three shifts every day Each shit is 8 hours long - Employees are required to clock in and out using the swipe card and links to the hours work, once clocked out, report produced by the computerised payroll system and employees paid on the basis of the hours worked. No process for monitoring the clocking in and out. And, an employee was seen clocking in several employees using the employees swipe cards Payroll department calculates the wages on a weekly basis; based on the reported hours worked multiplied by the hourly wage rate and taking into account appropriate tax deductions CASE STUDY No one checks these calculations During the year hourly wage rate was increase and HR notified the payroll department Each Friday payroll prepares the wage packets and physically hands these to the employees but for the night shift workers, the pay packets are given to the supervisor to distribute. And, if any worker is absent for the night shift, the supervisor returns the payback to the payroll on Monday morning. Sales and administration staff Sales and admin staff are paid monthly via bank transfer Employee numbers during the year can fluctuate due to leavers and starts and HR is slow in passing this information to payroll Redundancies During the year the company decided to outsource the sales ledger department and as a result 14 employees were made redundant. A redundancy provision, which is material, will be included in the draft accounts. Required a) Describe the substantive procedures you should perform to confirm the accuracy and completeness of Chuck and Co payroll figure. b) Describe the substantive procedures you should preform to confirm the redundancy provision at the year end.

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