a. Identify the computer runs that are illustrated in Figure 10-5.

b. Which runs may be tested by the use of test data?

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AUDIT PROGRAM Type of testing: Transactions Cycle: Expenditure A. Payroll transactions are properly executed: Purpose: Study of internal control Class of transactions: Payroll 1. Randomly select a sample of employees from payroll registers for the year to date; for each employee. Examine authorizations for hirings, wage rates, payroll deductions, and terminations. Examine evidence of time worked and supervisory approval of total hours worked. Review internal verification of employee payroll calculations and/or verify amounts by recalculation. Trace net pay to "paid" check Trace earnings data to employee's earnings records. 2. Witness the distribution of a payroll. 3. Observe clock card and timekeeping procedures. 4. Review union contracts, pension plans, and profit-sharing bonus plans for compliance therewith. B. Payroll transactions are properly recorded: 1. Randomly select a sample of payroll summaries for the year to date; for each summary, Review evidence or ascertain agreement of summary with payroll regis- ter totals and labor cost distribution summary. Trace data on summary to journal entries. Vouch corresponding entries for payment of wages. 2. Review internal reconciliation of employee earnings records with payroll summaries and tax returns for one quarter. 3. Vouch payroll tax entries to tax returns and "paid" checks for one quarter. 4. Foot and cross-foot journals and trace postings to general ledger accounts for months. 5. Scan payroll journal entries for unusual items and investigate any items noted. C. Custody of assets is properly maintained: 1. Review selected reconciliations of payroll bank accounts. 2. Trace unclaimed payroll checks to payroll records. Figure 10-5. AUDIT PROGRAM: TESTS OF PAYROLL TRANSACTIONS