...Chapter 18 Audit of the Payroll and Personnel Cycle ← Review Questions 18-1 General ledger accounts that are likely to be affected by the payroll and personnel cycle in most audits include the following: Cash Direct labor Inventory Salary expense Construction in progress Commission expense Wages payable Payroll tax expense Payroll taxes withheld Accrued payroll taxes 18-2 In companies where payroll is a significant portion of inventory, as in manufacturing and construction companies, the improper account classification of payroll can significantly affect asset valuation for accounts such as work in process, finished goods, and construction in process. For example, if the salaries of administrative personnel are incorrectly charged to indirect manufacturing overhead, the overhead charged to inventory on the balance sheet can be overstated. Similarly, if the indirect labor cost of individual employees is charged to specific jobs or processes, the valuation of inventory is affected if labor is improperly classified. When some jobs are billed on a cost plus basis, revenue and the valuation of inventory are both affected by improperly classifying labor to jobs. 18-3 Five tests of controls that can be performed for the payroll and personnel cycle are: 1. Examine time card for indication of approval to ensure that payroll payments are properly authorized. The purpose of this test is to determine that recorded payroll payments are for work actually...
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...31, 2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include tests on controls...
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...2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include tests on controls...
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...determining where to place a document, the HR department has to consider what information the document contains. Personnel files cannot have documentation with medical, social security numbers or sensitive information (Personnel Records: What should, and should not, be included in the personnel file?, 2015). Most employers have three or four different employment record filing systems (Audit: Personnel Files: Employment (Personnel) Records Audit Checklist (Including Form to Audit Individual Employee Personnel Files), 2014). Personnel files contains employee performance information; confidential records contain non job-related or confidential information; payroll records are usually maintained by the payroll department; I-9 files are filed separately. Personnel records can be maintained by paper or electronically maintained by scanning into a secured system. Personnel Files * Employee applications/Resumes (online applications retention 2 years from the date of personnel action) * Job description. * Pay compensation information. * Letter of Recognition. * Records relating to job such as promotions, demotions, layoffs, training and education. * Warnings, counseling, or disciplinary notes. * Termination. * Record retention is different to some documents in file, most has a retention time of 7 years after termination. Confidential Files * Medical records (retention 6 years after plan year) * Drug testing (retention: negative test 1 year from test date;...
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...CHAPTER 5 Internal Control Evaluation: Assessing Control Risk LEARNING OBJECTIVES | | | | | |Review |Exercises, Problems, | | |Checkpoints |and Simulations | | | | | |Distinguish between management’s and auditors’ responsibilities |1, 2, 3, 4, 5 | | |regarding a company’s internal control. | | | | | | | |Define and describe internal control. |6, 7, 8 | | | | | | |Define and describe the five basic components of internal control, |9, 10, 11, 12, 13, 14, 15, 16, |62, 66, 69, 70 | |and specify some of their characteristics. ...
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...Audit Program Design ACC/546 Chandria Willis August 3, 2015 Frank G. Elliot Apollo Shoes, Inc. Langley, ME Dr Mr. Elliot, We have developed test o controls of substantive test of transactions, and analytical procedures for the audit of Apollo Shoes Inc.’s sales and collection cycle, payroll and personnel cycle, acquisition and payment cycle, and Inventory and Warehousing cycle in line with the generally accepted auditing principles. The objective is to verify existence, accuracy and completeness. A substantive test should be associated with each of the transactions related to the audit objectives. The objectives of the audit include the occurrence, accuracy, completeness, posting, classification, summarization, and timing. Analytical Procedures must be performed in the planning stage of the audit and reviewed near the end of the audit. This serves to provide additional assurance to the auditor that the account has also been presented fairly in line with the generally accepted accounting principles. Based on previous research, it is our opinion...
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...storage capacity and processing capabilities. It also serves great advantage for improving the effectiveness and efficiency of payroll processes. The role of Information Technology is constantly evolving and has changed significantly and now enables new competencies that make new strategies no matter the sector is. Businesses of all sizes make use of computer based systems because of its great benefits to improve efficiency of business transactions, not only does this kind of technology improve their daily routine and processes, but also boost their daily business transactions, communications and general operations. Business establishments or corporations have to use modern technology to be competitive. The application of up-to-date technology helps businesses solve complex problems making daily office tasks faster, secured and most of all cost-saving. Payroll is the sum of all financial records of an employee. In accounting, payroll refers to the amount paid to employees for services they provided during certain period of time. Payroll system is the heart of every Human Resource System in an organization. [STUD2011] The developed system for Benigno “Ninoy” S. Aquino High school is classified as a Transaction Process System (TPS) because it can provide accurate data and reports in a certain business, In this case the payroll in the said school. Payroll System with Biometrics for Benigno “Ninoy“ S. Aquino National High School 1-1 Transaction Processing System has characteristic...
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...specific software, we need to set a system of internal controls and to clearly outline the risks that are inherent in these systems. To begin, internal control systems are the various methods and measures designed to safeguard assets, to check the accuracy and reliability of accounting data, to promote operational efficiency, and to encourage adherence to prescribed managerial policies. First, there we will identify the risks and internal control points by incorporating these risks into the flowcharts provided in the information systems. The risks for the payroll system are bad inputs that would lead to deficient or distorted payroll amounts (requiring input controls), improper access of the files by the wrong people (personnel controls & access controls), and loss of these critical records (backup systems for this data). The risks inherent in the AR system are in making sure the inputs to the system are reliable. There are risks in the inputs to the system, to make sure the system processes the transactions correctly and completely, and the calculations are sound and the outputs of the system are correct. Furthermore, there are risks in the controls within the database to make sure the data is stored correctly and that the proper inventory is accessed in a manner that will preserve true transaction nature of the business in the data (concurrency controls). Furthermore, there should be controls on who accesses the data at the appropriate time (personnel controls), there should...
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...obligation of the borrower). Customer risks assessments (relates to customers impact on the organizations reputation and financial position). Supply chain risks assessments (relates to the creation of products and services). Products risk assessments (relates to an organization production from inception to birth). Security risks assessments (relates to physical assets and information protection and security). Information technology risks assessments (relates to potential tech failures), and project risks assessments (relates to the delivery or implementation of the project). Within this proposal the team will be addressing the appropriate controls to cover purchasing, accounts payable, cash disbursements, finance, investment, and payroll. Appropriate Controls for Purchasing Appropriate...
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...Accounting Cycle Description Paper Team A ACC/340 Accounting Cycle Description Paper The payroll processing cycle is very time consuming and tedious when done manually. Therefore, the ‘Mom and Pop’s Grocery Store’ has elected to integrate its payroll with a computer software program. With this implementation the payroll process will be more efficient and effective. This paper will explain how the payroll processing cycle for ‘Mom and Pop’s Grocery Store’ integrates onto an enterprise-wide accounting information system. An enterprise-wide accounting information system “focuses on the business process of the organization as a whole” (Bagranoff, Simkin, & Stand, 2008, p. 7). Business process reengineering (BPR) is a total re-design of processes used by an organization that are no longer effective or efficient (Braganoff et al, 2008, p. 163). The ‘Mom and Pop’s Grocery Store’ will use BPR to update the old payroll process to the new enterprise-wide AIS system. The Accounting Information System (ASI) is a system that is put in place for a company to maintain its accounting system. The input devices commonly associated with AIS systems include: “standard personal computers or workstations running applications; scanning devices for standardized data entry; electronic communication devices for electronic data interchange (EDI) and e-commerce” (Business Glossary, p. 1, 2005, 2000, 1995, 1987). In addition, many financial systems come with Internet settings...
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...Controls for Outflows Accounting 544 / Internal Control Systems Department of Accounting February 16, 2015 Organizations are always fighting to prevent fraud from happening in their day-to-day operations. Fraud can occur almost anywhere within an organization, but it is common in areas of the expenditure cycle because of inadequate recording of transactions or the uncertainty of when to record transactions. When actions such as these occur, the organizations financial statements are understated which causes concerns for financial statement users. For these reasons, organizations need to implement strong internal controls to prevent errors or fraudulent activities from occurring within their daily operations. Team B will discuss several proposals for implementing appropriate controls to cover purchasing, accounts payable, cash disbursements, finance, investment, and payroll. Purchasing According to Louwers, Ramsay, Sinason, and Strawser (2007), purchasing is the gaining of goods or services for the expenditure of cash. It affects more accounts in the general ledger than any other action. It affects inventory, cash, and accounts payable just to name a few (Chapter 8, Acquisition and Expenditure Cycle). Typical source documents for purchasing include invoices from suppliers and vendors, purchase orders, receiving reports made when orders arrive, purchase journal, and fixed asset report. There may be occasions when some items in inventory is unaccounted for due to missing...
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... * Communications Arts * Ethics * Research Techniques and Analysis * Victimology * Adult Development and Life Assessment | Experience | Dayton Public Schools 1997-2000Level I Clerical (Assistant to The Director of Safety and Security) * Served as personal assistant to the Director of Transportation * Dispatched drivers for the purpose of meeting the scheduled demands * Evaluated bus routes for the purpose of providing services in a safe and cost effective manner. * Informed school personnel, parents, etc. of practices and incidents (e.g. rules, regulations, laws, procedures, etc.) for the purpose of providing information for follow-up action and/or proper procedures. * Maintained a variety of manual and electronic documents, files and/or records for the purpose of documenting activities, providing reliable information, and complying with district, state and...
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...INTERNAL CONTROLS Introduction Internal Controls are to be an integral part of any organization’s financial and business policies and procedures. The objectives of internal controls are: ▪ Protecting resources against waste, fraud, and inefficiency; ▪ Ensuring accuracy and reliability in accounting and operating data; ▪ Securing compliance with the policies of the organization; ▪ Ensuring compliance with applicable laws and regulations; ▪ Evaluating the level of performance in all organizational units of the organization; ▪ Providing management with reasonable assurance that leave and payroll transactions are authorized, valid, complete and accurate; ▪ Safeguarding leave and payroll documents from theft, loss and destruction; and ▪ Internal controls are simply good business practices. The benefits of good internal controls are: ▪ Prevents errors and irregularities from occurring. If errors or irregularities do occur, they will be detected in a timely manner. ▪ Ensures that issues arising from reporting errors are kept to a minimum and quickly resolved. ▪ Protects employees: o By clearly outlining tasks and responsibilities; o By providing checks and balances; and, o From being accused of misappropriations, errors or irregularities. What are Internal Controls? Internal controls are the practices performed by departments to provide management with reasonable assurance that assets are safeguarded and transactions are...
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...FAX (662) 457-3982, 467-3174 In the past, the personnel will do their paperwork manually (manual recording practices). However, as paperwork requirements grew, and the organisations needed more and more information about their employees, there is a need to use the computer-based management information system that getting data and information of the employees to be assessed. In this case, the state-of-art system was introduced and implemented to the organisations. According to Raymond (1998), the status of personnel data was becoming more important due to the development of government laws and regulations through the Equal Employment Opportunity (EEO), Affirmative Action Program (AAP), and Occupational Health and Safety Administration (OHS). Because of these organisation needed to provide the reports showing that the personnel practices complied with the laws. Thus, there is a need to use the computer-based system to provide accurate information effectively and efficiently to the national government with statistics or data that are readable. All organisations need to keep records about their personnel, for instance, to comply with taxation requirements, for use in emergencies and as the basis for making decisions about the work their personnel perform. These organisations have a human resources function that handles the personnel’s records. The ideal system that is used in managing the personnel is called the Human Resource Information System (HRIS). ...
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...31, 2010 (Tentative) AUDIT SCOPE: Sales/revenue and collection cycle Payroll and personnel cycle Acquisition and payment cycle All Transactions, orders, and payments processed January 1, 2007 through December 31, 2007 AUDIT OBJECTIVES: • To determine internal control compliance to sub objectives for payroll and personnel cycle, sales/revenue and collection cycle, and the acquisition and payment cycle. • To obtain control evidence and documentation about the existence, accuracy, classification, timing and completeness of recorded acquisition transactions. CRITERIA: Statement on Auditing Standards (SAS) No. 99 – Fraud Auditing Standards AUDITOR ASSIGNMENTS: John Butler – Sales and Collection David Sargent – Payroll and Personnel Perry Boydstun – Acquisition and Payment Cycle METHODOLOGY: Each auditor will perform their assigned area of tests of controls and substantive test using sampling techniques as appropriate. Strengths and weaknesses’ should be denoted by using a “S” or “W” on each area applicable area of the flowchart and checklist of each assigned area. The summary status (“Ss” and “Ws”) will be listed in the bridge worksheet for SOX 404 Audit analysis. Bridge Worksheet for Sales and Collection Cycle – SOX 404 Audit Public companies typically rely heavily on proper internal controls to maintain an effective sales and collection cycle. As such, AOW will need to expand the substantive tests of transactions to include tests on controls...
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