Requirement e. For each control, identify one audit test that the auditor could use to uncover misstatements resulting from the absence of the control. (Letters may be used more than once.) (Click the icon to view the audit tests.) Audit test to uncover misstatements Internal control Human resource policies require an investigation of an employment application from new employees. Investigation includes checking the employee's background, former employers, and 1. references. 2. Approval of department head or foreman on time records is required before preparing payroll. All prenumbered time records are accounted for before beginning data entry for preparation of 3. payroll. The payroll accounting software calculates gross and net pay based on hours inputted and information in employee master files, and payroll accounting personnel double-check the 4. mathematical accuracy on a test basis. The payroll accounting software application will not accept data input for an employee number 5. not contained in the employee master file. Persons preparing the payroll do not perform other payroll duties (e.g., human resources or 6. approval of time records) nor do they have access to payroll data master files or cash. Written termination notices, with properly documented reasons for termination, and approval by 7. an appropriate official are required. All checks and notices of electronic payments not distributed to employees are returned to the 8. treasurer for safekeeping and follow-up. Online ability to add employees or change pay rates to the payroll master file is restricted via 9. passwords to authorized human resource personnel. MED > 3 x > N & Audit test to uncover misstatements An examination of cancelled checks or electronic payroll deposits and supporting documents, including time records and personnel records, is a test of the possibility of fraud. A test of the calculation of payroll is a test for an S. unintentional error caused by employees who are not competent. Attempt to access the online payroll master file using a password that is not T. allowed access to that master file. Check to see that all employees that are punched in one day are physically .present. Examine cancelled checks to make certain that each check is properly endorsed, supported by a time record, and the person to whom the check is made out is still working for the company. Include test data transactions with invalid employee numbers to be inputted into the payroll accounting system and determine that all invalid transactions are W. automatically rejected by the software application. Obtain a list of company employees and make sure that each one has received X. a paycheck for the time period in question. Perform a surprise payoff in which the auditor accounts for all paychecks and distributes them to the employees, who must provide identification in order to Y. receive their checks or payroll direct deposit notifications. V. D D z. Recheck the amounts for gross payroll, withholding and net payroll. Test month-end bank reconciliations in detail to determine that the account reconciles properly, that all supporting documents are proper, looking especially for a check that cleared and was supposed to be voided, and that no alterations AA have been made to the bank statement. Print Done