COMMERCE 4AD3 Chapter Notes - Chapter 13: Indian Railways, General Ledger, Child Custody
9 Dec 2017
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Management"s main control objectives are the authorization and validity of payroll payments, to ensure only real employees are paid, and only for the work they have done. Main risk is ownership & existence assertion; process involving cash payments to individuals is vulnerable to fraud. Ownership (rights & obligation) - they worked the time they are paid for. Valuation - amount of pay is properly calculated. Completeness - that all employees were paid. Key control activities are segregation of duties, authorization of input data, and review of output. Auditors main concern is management"s control over validity, accuracy and authorization and they often test controls over payroll processing by using dual-purpose tests for payroll reports: typical activities (need segregation of duties) Personnel and labour relations: hiring and firing. Timekeeping and cost accounting: payroll preparation and cost accounting. Payroll accounting - cheque prep, related payroll reports. Payroll distribution - custody of cheques and distribution to employees: control activities.
