Required:
Write a memorandum to your audit manager for each of the procedures, in which you identify the transaction-related audit objective(s) and discuss an audit test to discover the potential misstatements if the procedures are not working effectively.

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ABCD CPA is an audit specialist in the construction industry. One of its clients is Good Contractors Limited (GC) which is engaged in the construction of houses, commercial complexes, roads, bridges and others. Because it has many on-going projects in the year, GC employs a lot of workers regularly. The workers are hired by the personnel department, assigned to work under a work supervisor in the site and paid on a bi-weekly basis through payroll cheques. You are the audit senior of ABCD CPA and assigned to audit the payroll of GC. Your manager wants you to ascertain whether GC has the following procedures. 1. Does the foreman verify the hours worked in the time card before submitting them to the payroll department? 2. Does personnel staff independently check the background of new workers before offering employment? 3. Does the data entry clerk compare the number of cheques issued with the batch control total? 4. Does the accountant independently reconcile the payroll transaction file with the master file and the general ledger? ABCD CPA is an audit specialist in the construction industry. One of its clients is Good Contractors Limited (GC) which is engaged in the construction of houses, commercial complexes, roads, bridges and others. Because it has many on-going projects in the year, GC employs a lot of workers regularly. The workers are hired by the personnel department, assigned to work under a work supervisor in the site and paid on a bi-weekly basis through payroll cheques. You are the audit senior of ABCD CPA and assigned to audit the payroll of GC. Your manager wants you to ascertain whether GC has the following procedures. 1. Does the foreman verify the hours worked in the time card before submitting them to the payroll department? 2. Does personnel staff independently check the background of new workers before offering employment? 3. Does the data entry clerk compare the number of cheques issued with the batch control total? 4. Does the accountant independently reconcile the payroll transaction file with the master file and the general ledger?

Answer rating: 100% (QA)

A payroll audit is a deliberate process you can undertake to review your payroll processes and records The ultimate goal of an audit is to deliver hig... View the full answer