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This case describes the payroll system used by the Lakeside Company.

Tests of controls are


designed by the auditor to verify that specific control features identified as possible strengths
are operating effectively. A sample of such tests would include the following:

a. Compare the payroll records produced by Sarah Sweet to time tickets completed by
hourly employees noting agreement as to hours worked;

b. Verify that time tickets have been appropriately authorized;

c. Recalculate salaried employees' monthly pay and compare to the payroll records;

d. Recalculate salesmen's commissions and compare to payroll records;

e. Recalculate payroll deductions based on government payroll tables and the data listed on
the W-4 form filed by each employee. Compare these deductions to the company's
payroll records;

f. Recompute Lakeside's payroll taxes and compare to total reported balance;

g. Verify mathematical accuracy of net wage figures (salary less deductions);

h. Foot the payroll record;

i. Verify that each payroll record has been properly authorized by Mark Hayes;

j. Compare the payroll transfer made from the general fund each period to the total payment
computed on the payroll record;
k. Review canceled checks for proper signature, amount, payee, date, and endorsement;

l. Review payments made for withholdings and payroll taxes. Compare these amounts to
payroll records kept for each of these items.