Assertion Evidence for Payroll

Question 1

Assertions about Classes of Transactions - Occurrence

Answer 1

Trace a sample of payroll checks to the master employee list to verify validity

Question 2

Assertions about Classes of Transactions - Completeness

Answer 2

Trace a sample of time cards / sheets to the payroll register

Question 3

Assertions about Classes of Transactions - Authorization

Answer 3

Test a sample of payroll checks for the presence of an authorized time card/sheet

Question 4

Assertions about Classes of Transactions - Accuracy

Answer 4

Recompute the mathematical accuracy of a sample of payroll checks.

Question 5

Assertions about Classes of Transactions - Cutoff

Answer 5

Trace a sample of time cards/sheets before and after period end to the appropriate weekly payroll report, and trace the weekly payroll report to the general ledger to verify payroll transactions are recorded in the proper period

Question 6

Assertions about Classes of Transactions - Classification

Answer 6

Examine a sample of payroll checks for proper classification into expense accounts

Question 7

Assertions about Account Balances at Period End - Existence

Answer 7

Vouch selected amounts from the account analysis schedules for the accruals to supporting documentation (payroll tax returns, corporate benefit policies, etc.)

Question 8

Assertions about Account Balances at Period End - Rights and obligations

Answer 8

Review supporting documentation to determine that the entity is legally obligated to pay the liability. Test a sample of bank reconciliations for the payroll bank account.

Question 9

Assertions about Account Balances at Period End - Completeness

Answer 9

Search for unrecorded liabilities

Question 10

Assertions about Account Balances at Period End - Valuation and allocation

Answer 10

Obtain an account analysis schedule for accrued payroll liabilities; foot schedules and agree total to general ledger. Compare amounts accrued to supporting documentation, such as payroll tax returns.

Question 11

Assertions about Presentation and Disclosure - Occurrence, and rights and obligations

Answer 11

Inquire about accruals to ensure that they are properly disclosed.

Question 12

Assertions about Presentation and Disclosure - Completeness

Answer 12

Complete financial reporting checklist to ensure that all financial statement disclosures related to payroll expense and related accruals have been made.

Question 13

Assertions about Presentation and Disclosure - Classification and understandability

Answer 13

Review accrued payroll liabilities for proper classification between short-term and long-term liabilities. Read footnotes to ensure that required disclosures are understandable.

Question 14

Assertions about Presentation and Disclosure - Accuracy and valuation

Answer 14

Review benefit contracts for proper disclosure of pension and post retirement benefits. Read footnotes and other information to ensure that the information is accurate and properly presented at the appropriate amounts.