Walsh Co. sells motor vehicle fuel, accessories and spare parts to retail customers. The company owns 25 shops.

The company has recently implemented a new computerised wages system. Employees work a standard eight-hour day. Hours are recorded using a magnetic card system; when each employee arrives for work, they hold their card close to the card reader and the reader recognises the magnetic information on the card identifying the employee as being ‘at work’. When the employee leaves work at the end of the day the process is reversed, showing that the employee has left work.

Hours worked are calculated each week by the computer system using the magnetic card information. Overtime is calculated as any excess over the standard hours worked. Any overtime over 10% of standard hours is sent on a computer-generated report by email to the financial accountant. If necessary, the accountant overrides overtime payments if the hours worked are incorrect.

Statutory deductions and net pay are also computer calculated with payments being made directly into the employee's bank account. The only other manual check is the financial accountant authorizing the net pay from Walsh's bank account, having reviewed the list of wages to be paid.

Required

a. Using examples from Walsh Co., explain the benefits of using computer-assisted audit techniques to help the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the audit opinion.

b. List five examples of audit tests on Walsh's wages system using audit software.

c. Explain how using test data should help in the audit of Walsh's wages system, noting any problems with this audit technique.