Mermaid Beach Hotel Ltd (Mermaid Hotel) operates a seaside hotel on the Sunshine Coast, providing

accommodation, bar and restaurant facilities for tourists. Casual and part-time wages are a major

expense item, particularly during summer, when up to an additional 30 staff members are employed.

In order to keep track of casual and part-time wages, Mermaid Hotel's operations manager prepares

a weekly roster (using Excel) showing:

employee name

employment position (e.g. bar staff)

days and hours rostered for the week

hourly rate

any additional amounts to be paid (e.g. meal allowances).

Each employee's immediate supervisor is required to sign a hard copy of the Excel roster spreadsheet

on a daily basis as evidence that the hours were worked as rostered. Any discrepancies (e.g. additional

hours) are recorded on a separate payroll adjustment form (PAF) and co-signed by the employee. The

Excel roster spreadsheet plus any PAFs are forwarded to the payroll officer at the end of the week and

used as the basis for that week's casual and part-time employee payroll. Last year, you still placed

reliance on controls over casual and part-time wages, despite finding some breakdowns in controls,

as you were able to obtain sufficient appropriate audit evidence that the controls were operating

effectively. Assume that you have decided it is appropriate to test internal controls over the relevant

payroll transactions.

Required:

Briefly outline how the information provided above would affect the nature, timing and extent of tests of controls.