Tatum and Almer Inc. is a fashion design firm specializing in the original sketches used by several major clothing manufacturers of women’s business apparel. The company has a tangible product, clothing sketches, but the primary input into the product is labor. Only minimal materials are used because all of the sketches are simply drawn by the designers on art paper.
M&M LLP is auditing Tatum and Almer Inc. Since M&M LLP is performing an integrated audit, it is testing the operating effectiveness of controls. Based on walkthrough procedures M&M LLP has concluded that controls are effectively designed. M&M LLP wants to include as many dual purpose tests as possible relating to human resources and payroll, since it has to perform tests of operating effectiveness anyway.
Extend each of the following tests of controls for the Tatum and Almer Inc. audit of human resources and payroll so that it becomes a dual purpose test. Indicate the financial statement audit evidence provided by the test.