ACCA F8 - Audit and Assurance Revision Kit 2016

(d)
Marks
Up to 1 mark per well described procedure.
Agree to the payroll records to confirm the accuracy of the accrual
Re-perform the calculation of the accrual
Agree the subsequent payment to the post year-end cash book and bank
statements
Review any correspondence with tax authorities to assess whether there are any
additional outstanding payments due, if so, agree they are included in the year
end accrual
Review disclosures and assess whether these are adequate and in compliance 4
Maximum marks 30
(a)
Deficiencies Recommended controls Test of control
The gross and net pay
automatically calculated by the
payroll package are not checked
at all.
The lack of checking increases the
risk that errors being accumulated
without being detected. This could
lead to wages being over- or
understated.
Additional wages may be paid as a
result. Statutory deductions may
be over- or under-paid, giving rise
to compliance issues. There is
also likely to be a loss of
employee goodwill.
The clerks update the standing
data to reflect the increase of
wages each year.
The apparent lack of authorisation
to changes in standing data
increases the risk of errors,
leading to the over- or
understatement of wages, and the
incorrect payment of wages.
This also increases the risk of
fraud, as the clerks have the
ability to make unauthorised
changes to standing data.
A senior member of the payroll
department should reperform a
sample of the gross and net pay
calculations. Any discrepancies
should be investigated. The
automatic gross and net pay
calculations must be reviewed and
approved before payments are
made.
Payroll clerks should not be
allowed to make standing data
changes.
Changes to the standing data to
reflect the annual wage increase
should be made by a senior
member of the payroll
department. These changes
should be checked by another
responsible official to identify any
errors or inconsistencies.
Obtain the recalculations
performed by the senior payroll
reviewer for evidence that the
automatic calculations have been
reviewed.
Review a sample of the gross and
net pay calculations generated by
the payroll system for evidence
that they have been approved and
signed off.
Observe a payroll clerk attempting
to make changes to payroll
standing data, to determine
whether the system rejects the
changes.
Review the log of changes made
to the standing data for evidence
that they were made by a senior
member of the payroll
department.
Review the log of changes made
to the standing data for evidence
that they have been reviewed by
another responsible official.
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