As part of the audit of McGree Plumbing & Heating, you have responsibility for testing the payroll and personnel cycle. Payroll is the largest single expense in the client's trial balance, and hourly wages make up most of the payroll total. A unique aspect of the business is the extensive overtime incurred by employees on some days. It is common for employees to work only three or four days during the week but to work long hours while they are on the job. McGree's management has found that this actually saves money, despite the large amount of overtime, because workplace agreements require payment for all travel time. Because many of the employees' jobs require long travel times and extensive startup costs, this policy is supported by both McGree and the employees.

You have already carefully evaluated and tested the payroll and personnel cycle's internal control and concluded that it contains no significant deficiencies. Your tests included tests of the time cards, PAYG withholdings, pay rates, the filing of all required ATO returns, WorkCover returns, payroll cheques and all other aspects of payroll.

As part of the year-end tests of payroll, you are responsible for verifying all accrued payroll as well as accrued payroll tax and PAYG tax withheld. The accrued factory payroll includes the last six working days of the current year. The client has calculated accrued wages by taking 60% of the subsequent period's gross payroll and has recorded it as an adjusting entry to be reversed in the subsequent period.

REQUIRED

List all audit procedures you would follow in verifying accrued payroll, PAYG tax and accrued payroll taxes.