You are an internal auditor with Nar Tani Sdn Bhd. The Chief Audit Executive has been assigned
Question:
You are an internal auditor with Nar Tani Sdn Bhd. The Chief Audit Executive has been assigned to you the task of auditing the company’s internal control for the payroll process. The company is still processing payroll manually. The policies of the company require employees to record time and attendance through punch-in cards and manual timesheets. Every timesheet requires checking by the respective supervisors. At the end of each month, payroll officers would check and review all time sheets and submit them to the head of the payroll prior to paying the salaries. The purpose of the present audit is to identify the effectiveness of existing controls in detecting errors and fraud. To meet this end, you developed the following objectives for the audit:
1. To determine the efficiency and effectiveness of the time and attendance system.
2. To ensure that the system has followed proper internal controls.
3. To ensure the time and attendance records have been properly completed, reviewed, approved, and processed.
4. To ensure the adequacy of separation of duties, security controls, and monitoring procedures
You have decided to analyze five weeks of the time and attendance records to verify the accuracy and authorization of the data. You will also vouch the transactions entered into the payroll system to the time sheet records to ensure completeness of payroll and interview the relevant persons incharge to understand the overall payroll system. At the end of the audit, the CAE has also requested you to draft an internal audit report for distribution to the relevant persons in the company.
Required:
Draft the internal audit report. Indicate some possible findings that can be highlighted in the report.
Fraud examination
ISBN: 978-0538470841
4th edition
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma