QUESTION $4$ Payroll

$(29$ marks$)$

Sebenza $($Pty$)$ Ltd is a growing farming company found in the Limpopo Province of South Africa. The rapid growth of the company has resulted in a lot of people being recruited in the past few years. This has also resulted in its wage bill increasing a lot. You have been assigned to be part of the audit team and to be responsible for auditing the payroll. The company uses a clock card system to record the time that employees have worked as most of its employees are hourly paid employees. The company still pays most of its employees at wage payouts as most of them do not have bank accounts. All employees' records are kept on an employee Masterfile and there are strict controls around it to avoid unauthorized access or changes.

REQUIRED

a$)$ Describe the audit procedures that you would carry out to confirm that employees on the payroll are not fictitious

$(10)$

b$)$ List the three benefits that would arise if the company was to change paying its employees using cash and wages will be paid by electronic funds transfer directly into employee's bank accounts

$(3)$

c$)$ Identify three advantages the company will derive from changing from a clock card system to a biometric reader to record the time worked by hourly paid employees

$(3)$

d$)$ Describe the controls that should be in place for the approval of hours worked by the employees

e$)$ List the assertions that relate to the wages expense and give a description for each

$(8)$

f$)$ Why would an auditor conduct a reverse physical verification, i$.$e$.$ from employees to wage records?

$(1)$

Total $100$ marks

END OF PAPER

AUD$30$BT $-$ Exit Exam $2022$

Page $7$