Lakeside is planning to report payroll expense of approximately $1.1 million for 2012. In reporting this figure, the companys management is making assertions encompassing five broad categories: existence or occurrence, completeness, rights and obligations, valuation or allocation, and presentation and disclosure. Explain how each of these assertions relates to the payroll expense balance being reported by Lakeside and give one substantive test that can be used by Abernathy and Chapman to verify each assertion.

A number of evidence-gathering techniques, such as observation and confirmation, are available to an auditor in performing audit procedures. The specific methods of gathering evidence depend largely on the type of account in question and the judgment of the auditor. List five additional evidence-gathering techniques and indicate the relative significance and reliability of each.

Lakeside maintains a separate bank account for its payroll checks. What benefits are derived from using such a system?