The internal audit team is testing payroll expenses for 2018 and you, as the internal audit assistant, were asked to perform preliminary analytical procedures on this expense.

Below is the data you obtained from the payroll department for the prior year 2017:

	2017	2018
# of employees	4,256
Average wage per hour	$14.50
Average employee hours per week	48
Regular hourly payroll expense	$128,180,000
Overtime hourly payroll expense	$38,454,000
Total payroll expense	$166,634,000	$161,253,989*
		*auditee provided

Here are some additional 2018 facts based on inquiries you conducted of the corporate controller and the payroll manager:

• 43 new restaurants were opened on October 1, 2018.
• Each restaurant employees 32 hourly employees.
• Overtime pays time and a half.
• Management implemented a strategy that reduces overtime by 50% per employee compared to 2017.
• There were no raises for hourly employees.
• Assume each employee works 40 regular hours per week.
• Assume 52 weeks per year.

Required:

-Using excel, create a working paper that documents the analytical procedure you completed. You will need to calculate your expectation of the total payroll expense for 2018. You are free to format your working paper as you see fit according to your departments guidelines. However, at minimum, your working paper should include the company name, working paper name, testing objective, sign-off, date, other tick-marks as you deem necessary (for instance, to tie to PY).

-Determine whether based on your expectation this expense needs to be investigated further and how you would go about doing that. Explain (in a separate tab of your excel file) the logic or thought process behind your determination.