List the supporting documents and records the auditor will examine in a typical payroll audit in which the primary objective is to detect fraud.

A.

Examine the payroll journal or listing, tracing transactions to the personnel files to determine whether the employees were actually employed during the payroll period.

B.

Examine the payroll journal or listing and individual payroll records, by selecting newly hired employees to determine if their pay is set up correctly.

C.

Examine the payroll tax returns against year end W-2 statements provided to employees to determine if there are any calculation errors.

D.

Examine the bank reconciliation statements to ensure employees have promptly cashed their checks, and no checks have been lost. This procedure will ensure that the cash account is not overstated.

E.

Examine the cancelled payroll checks for employee name, authorized signature, and proper endorsement, watching specifically for unusal or recurring second endorsements.

F.Examine the payroll checks, observing each employee as he or she picks up and signs for his or her

check,

or records of direct deposits made to employee bank accounts.

G.

Examine the payroll transactions for adherence to tax regulations, and payments for income tax withholding, Social Security, and unemployment taxes.

H.

Examine the time records, testing them for reasonableness or observing whether they are being completed by the proper employees.

I.

Examine the payroll journal or listing and individual payroll records, selecting terminated employees to determine whether each terminated employee received his or her termination pay in accordance with company policy and whether each employee was paid in the subsequent payroll period.