Auditing payroll cycle

What are the common errors and frauds in the personnel and payroll cycle? Which control characteristic are auditors looking for to prevent or detect these errors and frauds? What features of the payroll system could be expected to prevent or detect payment of a fictitious employee? What about the omission of payment to an employee?

Considering the Going-Concern Assumption

What options does a business owner have when approached by an auditor, who has a friendly client-auditor relationship between the two, wanting to discuss the issue of a going-concern report and footnote disclosure on the financial reports when the business at hand has gone south for the past year in sales? How might a going-concern explanatory paragraph be able to become a self-fulfilling prophecy for a company? What potential implications arise for the accounting firm if they issue and unqualified report without the going-concern explanatory paragraph? What is the importance of full and accurate auditor reporting to the public and possible consequences for both owner and auditor if... click for more

You have been asked by the board of trustees of a local church to review its accounting procedures.

14-28 (Controls over cash receipts processing at a church) You have been asked by the board of trustees of a local church to review its accounting procedures. As a part of this review, you have prepared the following comments relating to the collections made at weekly services and recordkeeping for members’ contributions: 1. The church’s board of trustees has delegated responsibility for financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been considered necessary in recent years because the same trusted employee has kept c... click for more

Control activities in payroll processing

As part of the audit of Manor Company, you are assigned to review and test the payroll transactions of the Galena plant. Your tests show that all numerical items were accurate. The proper hourly rates were used, and the wages and deductions were calculated correctly. The payroll register was properly footed, totaled, and posted. Various plant personnel were interviewed to ascertain the payroll procedures being used in the department. You determine that: 1. The payroll clerk receives the time cards from the various department supervisors at the end of each pay period, checks the employee's hourly rate against information provided by the personel department, and records the regular ... click for more

Evaluation of Jameson Company's internal controls - raw materials and supplies inventory.

The Jameson Company produces a variety of chemical products for use by plastics manufactures. The plant operates on two shifts, five days per week, with maintenance work performed on the third shift and on Saturday as required. An audit conducted by the staff of the new corporate internal audit department has recently been completed, and the comments on inventory control were not favorable. Audit comments were particularly directed to the control of raw material ingredients and maintenance materials. Raw material ingredients are received at the back of the plant, signed for by one of the employees of the batching department, and stored near the location of the initial batching process. ... click for more