In many companies, labor costs represent a substantial percentage of total dollars expended in any one account¬ ing period. One of the auditor's primary means of verifying payroll transactions is by a detailed payroll test.

You are making an annual examination of Lethbridge Inc., a medium-sized manufacturing company. You have selected a number of hourly employees for a detailed payroll test. The following worksheet outline has been prepared.

Required

a. What factors should the auditor consider in selecting his or her sample of employees to be included in any payroll test?

b. Using the column numbers above as a reference, state the principal way(s) that the information for each heading would be verified.

c. In addition to the payroll test, the auditor employs a number of other audit procedures in the verification of payroll transactions. List five additional procedures that may be employed and the corresponding audit objective.

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COLUMN NUMBER 1 2 123 3 4957 6 8 9 10 11 12 13 14 15 HEADING Employee number Employee name Job dassification Hours worked: Straight time Premium time Hourly rate Gross earnings Deductions: Income tax withheld Canada Pension Plan withheld Employment insurance withheld Union dues Amount of cheque Cheque number Account number charged Description of account