Assertion and Related Control Activity - Payroll

Question 1

Occurrence - Adequate personnel files

Answer 1

Review and test personnel files

Question 2

Occurrence - Initiation of changes in employment status, wages or salaries, and benefits made by operating departments reported to the office of human resources

Answer 2

Review and test client’s procedures for changing employee’s records

Question 3

Occurrence - Time clocks used to record time

Answer 3

Observe employees’ use of time clock

Question 4

Occurrence - Time cards approved by supervisors

Answer 4

Inspect time cards presented for approval by supervisor

Question 5

Occurrence - Only employees with valid employee numbers paid

Answer 5

Review and test client’s procedures for entering and removing employee numbers from the payroll master file

Question 6

Occurrence - Use of payroll budgets with review by departmental supervisors

Answer 6

Review client’s budgeting procedures

Question 7

Completeness - Pre-numbered time cards accounted for by client personnel

Answer 7

Check numerical sequence of time cards

Question 8

Completeness - Verification that all employees in the master payroll file submitted a time card for the pay period.

Answer 8

Review and test client’s verification procedures

Question 9

Authorization - Authorization procedures for (hiring and terminating employees, time worked, wage, salary, and commission rates, withholdings, benefits, and issuing payroll check

Answer 9

Review and test authorization procedures for each point of authentication in the payroll cycle

Question 10

Accuracy - Verification of payroll amounts and benefit calculations

Answer 10

Review and test client’s verification procedures

Question 11

Accuracy - Use of payroll budgets with review by department supervisors

Answer 11

Review client’s budgeting procedures

Question 12

Accuracy - Changes to master payroll file verified through “before and after” reports and then reconciled to general ledger

Answer 12

Test reconciliation of “before and after” reports to payroll master file, and review reconciliation of master file to general ledger

Question 13

Cutoff - Notices of additions, terminations, and changes to salaries, wages, and deductions reported promptly to the payroll processing function, after which the changes are updated promptly on the master payroll file

Answer 13

Review and test client’s procedures for changes to master payroll file

Question 14

Cutoff - All time sheets forwarded to the payroll department weekly

Answer 14

Review and test procedures for processing time sheets

Question 15

Cutoff - Procedures that require recording payroll liabilities as soon as possible after they are incurred

Answer 15

Review and test procedures for recording payroll liabilities

Question 16

Classification - Chart of accounts

Answer 16

Review chart of accounts

Question 17

Classification - Independent approval and review of accounts charged for payroll

Answer 17

Review and test procedures for classifying payroll costs

Question 18

Classification - Use of payroll budgets with review by department supervisors

Answer 18

Review client’s budgeting procedures