A payroll audit is an analysis of a companys payroll processes to ensure accuracy. Introduction to auditing payroll and personnel cycle. Payroll audits examine things like the businesss active employees, pay rates, wages, and tax withholdings. Audit of payroll and personnel cycle by beeha nazri on. Two major balancerelated audit objectives tests of details of balances for liability accounts tests of details of balances for expense accounts presentation and disclosure objectives types of audit tests for the payroll and personnel cycle end of chapter 20 the overall objective in the audit of the payroll and personnel cycle is to evaluate whether the account balances affected by the cycle are fairly stated in accordance with generally accepted accounting principles. You can print payroll cycle reports at any time after prepayroll and before final update. Testing the payroll system fundamentals of auditing. Payroll salary or hourly personnel functions learn with flashcards, games, and more for free. After studying this chapter, students should be able to. Personnel and payroll questionnaire internal control questionnaire question yes no na remarks payroll, consisting of employee salaries, wages and related expenses, generally comprises a material portion of a universitys expenditures.
Chapter 20 audit of the payroll and personnel cycle. Audit procedures included analyzing offcycle payrolls and payroll adjustments, and interviews of personnel in the core administrative offices of payroll, human. Audit of the payroll and personnel cycle 2 audit of the. Payroll process involves interacting with multiple departments and personnel. These components include organizational management, benefits, personnel and travel administration, as well as time management, and training and events. Auditnet has templates for audit work programs, icqs, workpapers, checklists, monographs for setting up an audit function, sample audit working papers, workpapers and a library of solutions for auditors including training without travel webinars. Key audit objectives for a clients payroll function. I respectfully submit the enclosed followup internal audit report of the town of westports human resource function. Also, there is relatively little independent third party evidence, such as confirmations. The payroll and personnel cycle begins with the hiring of personnel and ends with payment to the employees for the services performed and to the government. Step 7 select the output options and click execute step 8 the next screen gives changed made to the employee. Audit procedures that are primarily for the detection of fraud in the payroll and personnel cycle include.
Audit of the payroll and personnel cycle pdf free download. I greatly appreciate the time, patience and cooperation of all parties involved in this followup audit. Chapter 20 solution manual 1chapter 20 audit of the. Flow of documents processed by the agency payroll and. Describe the business functions and the related documents and records in the acquisition and payment cycle.
Download personnel file audit checklist as an xls or pdf file. Business publishing, auditing 12e, arensbeasleyelder 18 1 learning objective 1 identify the accounts and transactions in the payroll and personnel cycle. To assist you in understanding how to audit payroll, let me provide you with an overview of a typical payroll process. Have either internal auditors or external auditors conduct a periodic audit of the payroll function to verify whether payroll payments are being calculated correctly, employees being paid are. Office of inspector general page 1 audit of the payroll process background. Auditing a clients payroll system allows an independent auditor to view the entire payroll system from the inside out. However, in a larger organization, the task of gathering data may look overwhelming. The objectives of this audit were to conduct audit work related to the internal controls over the. The purpose is to determine in the auditors opinion whether the data in payroll records. Personnel and payroll cycle2state administrative manual section 20060 internal control reporting states. Enter sap user id in the changed by field to determine changes made by a particular user to an employee. Learning objective 1 identify the accounts and transactions in the payroll and personnel cycle.
Y et the personnel assigned to administer the complexities of payroll are often. This audit report provides the results of our audit of the payroll distribution and labor effort reporting system used at the state university of new york suny at stony brook stony brook. If there any pernrs in miscompare, and you are not sure if the difference is genuine or due to some changes in master. Audit report on the controls over personnel, payroll, and. Auditing payroll an overview payroll exceeds fifty percent of total expenses in many governments, nonprofits, and small businesses. Consideration of internal control components all five components of ic are relevant to. Audit of the payroll and personnel cycle slideshare. This process is very useful for payroll regression.
Accounts in the payroll and personnel cycle the overall objective in the audit of the payroll and personnel cycle is to evaluate whether the account balances affected by the cycle are fairly stated in accordance with generally accepted accounting principles. Employees expect and should receive prompt and accurate payment of salaries and wages. Audit of payroll and personnel cycle design and perform analytical procedures for the payroll and personnel cycle. In smaller organizations, these inputs are received from a consolidated source or fewer teams. During an audit, testing payroll transactions includes sniffing out employees paid who shouldnt have been and making sure valid employees are paid the. Check that payroll expenses and payroll tax expenses the company records are for employees who exist and work during the pay period. Chapter 18 audit of the payroll and personnel cycle. A separate offcycle run calendar has been created to anticipate the. Personnel agendas authorizing pay rate changes are not filed in employee payroll files. Auditing the accounts and transactions in the payroll and personnel cycle. In accordance with our fy 2016 audit plan, our office conducted an audit of the payroll process. Payroll and personnel cycle transaction cycle that begins with the hiring of personnel, includes obtaining and accounting for services from the employees, and ends with payment to the employees for the services performed and to the government and other institutes. Payroll checksstubs are periodically distributed by someone outside the normal payroll distribution function.
Salaries, on the other hand, are paid monthly to employees normally working in administrative departments, via electronic transfers to their bank accounts. For payroll expense transactions test these five assertions. Pdf audit of the payroll and personnel cycle chapter 18. Tests of payroll and personnel cycle direct labor work in process indirect labor. Chapter 16auditing the production and personnel services. Understand the assertions of auditing the payroll and personnel. The payroll and personnel cycle begins with the hiring of personnel and ends with payment to the employees for the services performed and to the government and other institutions for the withheld and accrued payroll taxes and benefits step 1 an employee is hired. You should conduct a payroll audit at least once per year to verify. Audit of the payroll and personnel cycle chapter prentice hall business publishing, auditing 12e, arensbeasleyelder 181 learning objective 1 identify the. Offcycle payroll offcycle checks may be requested for earnings that were to be paid on a prior scheduled payroll run but were not processed due to incomplete records andor appointments. Audit of payroll distribution and effort reporting system. Identify the accounts and the classes of transactions in the acquisition and payment cycle.
You use final update to update employees transactions, tax, and payment history, and to create actual journal entries from the pro forma entries. Updating the payroll master file, personnel records are accumulated. Audit of the payroll and personnel cycle linkedin slideshare. Payroll team are also responsible for processing the payroll for brent housing partnership bhp. Examples of analytical procedures used by the auditor in the early stages of an audit of personnel services are in fig. Audit programs, audit resources, internal audit auditnet is the global resource for auditors. Consider using a selection of the following controls for nearly all payroll systems, irrespective of how timekeeping information is accumulated or how employees are paid audit. Office of inspector general page 3 audit of the payroll process audit results executive summary overall, hris does an effective job of processing the biweekly payroll within the. Audit of the payroll and personnel cycle chapter 17 2003 prentice hall business publishing, auditing and assurance services 9e, arenselderbeasley 17 1 2. Two major balancerelated audit objectives tests of details of balances for liability accounts tests of details of balances for expense accounts presentation and disclosure objectives types of audit tests for the payroll and personnel cycle end of chapter 20 audit of the payroll and personnel cycle chapter 20 learning objective 1 identify the. Possible misstatement compare direct labor as a percentage of sales with previous.
Sap hcm consists of important submodules like personnel administration pa, organizational management om, time, payroll all of which will be discussed in detail. Audit payroll and personnel cycle ppt download slideplayer. The payroll and personnel cycle begins with hiring employees and ends with paying them for the services they performed and the government and other institutions for withheld and accrued payroll. The research foundation suny foundation helps to acquire and manage grants for all suny campuses. A payroll audit was undertaken during 201516 and a draft report issued in july 2016. Unclaimed payroll checksstubs are returned to an individual other than those involved with the payroll process. Examine cancelled payroll checks for employee name. Audit procedures that are primarily for the detection of fraud in the payroll andpersonnel cycle include. Final update is the last step in the payroll cycle. Control risks assessment of payroll and personnel cycle.
Therefore, it is often a significant transaction area. Personnel records should be kept independently of the payroll department for each employee giving details of engagement, retirement, dismissal or resignation, rates of pay, holidays etc, with a specimen signature of the employee. Occurrence tests if the payment transactions actually took place. Audit of the payroll and personnel cycle chapter 18.
The training covered the topic of off cycle requests and processing requirements andor restrictions. Pursuant to the fisma financial integrity and state managers accountability act of 1983, the head of each state entity shall prepare and submit a report on the adequacy of their entitys internal control on. During your audit, you need to test management financial statement assertions. Audit risk is mostly in the processing of payroll transactions. Adequate controls are necessary to prevent misstatements in. There can be information like midyear salary revision data, attendance data, etc.