You are reviewing the audit work for Online Ltd., a large Canadian company. Online uses a service bureau to process all wages. Time sheets are authorized by the appropriate supervisor, batched, and sent to the service bureau for processing. Detailed payroll reports, as well as the time sheets, are returned to the accountant, who reviews the reports for reasonableness and initials them as evidence of her review. Your audit assistant performed a month-to-month comparison of wages and found no abnormal trends. The following conclusion was noted on the working paper: I have checked that all payroll reports from the period were reviewed and initialled by the client. This, in conjunction with the results of analytical review, led me to conclude that the payroll expense is fairly stated. What additional questions will you ask or what audit procedures will you suggest to ensure payroll is fairly stated?

Compare monthly figures to expectations

No further work is required

Was there a change in the number of staff during the year

Obtain a report from the service entity auditor

What was the level of control risk assessed

How much time was spent on the review of payroll expense