You are the auditor of XYZ Limited and are in the process of planning the audit of payroll. XYZ maintains its accounting and personnel records on a centralized database. The payroll Masterfile which is updated fortnight (i.e., fortnightly payroll period) contains the following fields.

Employee number

Employee name

Employee address (i.e., street, suburb, postcode)

Qualifications

Job Specification

Commencement date of employment

Termination date of employment

Agree annual pay rate

Other deductions

Fortnightly gross pay

Fortnightly tax deductions

Fortnightly superannuation deductions

Fortnightly other authorized deductions

Fortnightly net pay

Gross pay-year-to-date

Tax deductions-year-t0-date

Superannuation deductions year-to-date

Other deductions-year-t0-date

Net pay-year-to-date

You have satisfied yourself that general controls in the system are reliable.

Required:

You have identified occurrence and measurement as the two key financial report assertions in relation to payroll expense. Explain why they constitute key assertions?

You have decided to apply ISA. Discuss 4 ISA audit evidence that will help you verify the occurrence and measurement assertions for XYZs payroll expense?