Payroll / salaries and wages

Normally there should not be many appointments and terminations, consequently audit work should concentrate on the maintenance of employees
and payments of salaries and wages.
Transaction life
cycle
Risk Potential Control Assertion
Addressed
Audit test to be Performed
Appointment of
personnel
Ghost employees
are included in the
personnel system
Letter of appointment and
personnel file (including
copies of certificates)
eedback from super!isor to
administration to confirm the
indi!idual has commenced
employment.
"#istence Tests of control:
or a sample of new employees obtain the
personnel files. $nspect required supporting
documents for appointments, including
information on the selection committee and
signed letter of appointment.
"!aluate whether the position has been filled in a
timely manner.
%ayments of
salaries
&alaries maybe paid
in duplicate, to
persons who are not
on the payroll and at
incorrect amounts.
Any amendments to
standing salary information
(or salary master file) should
be properly authori'ed.
Access to standing salary
information should be
restricted to authori'ed
personnel.
(easuremen
t, Accuracy
Tests of control:
or a sample of changes made to standing salary
information (for e#ample salary increases),
confirm that changes were appropriately
authori'ed.
Substantive tests:
or a sample of changes made to standing salary
information, inspect supporting documents and
confirm the !alidity of changes affected.
&alaries are paid at
correct amounts
)ompletenes
s,
*ccurrence
Tests of control:
or selected payroll runs inspect proof that+
,he payroll information has been authorised
by an official independent of payroll
processing.
Line managers ha!e confirmed the payroll
details for their own departments.
$n
Transaction life
cycle
Risk Potential Control Assertion
Addressed
Audit test to be Performed
spect proof that there is regular and independent
reconciliations are performed between the
payroll and the financial system.
,he employee records kept by line managers
are independently and regularly reconciled to the
-. department/s records (at least twice
annually).

Substantive tests:
or a sample of employee payments recorded in
the ledger+
)ompare the basic salary included to the
appro!ed salary schedule.
0erify that !alid supporting documents e#ist
for all additional salary inputs including
o!ertime payments, lea!e pay, incenti!es,
bursaries, tra!el claims, subsistence claims,
loan repayments, garnishee orders, etc.
)onfirm that all additional salary inputs are
properly authorised by the line manager
before the payroll run.
)onfirm that salary deductions ha!e been
properly calculated
&tatutory payments ha!e been appropriately
made.
.ecalculate salary amounts.
or a sample of employees on the payroll
physically !erify the e#istence of the employees.
1here this procedure is not practical, confirm
whether that the selected employee(s) had take
lea!e during the past year. 1here no lea!e
transactions ha!e been noted further follow2up
may be necessary to !erify the e#istence of the
employee.
Transaction life
cycle
Risk Potential Control Assertion
Addressed
Audit test to be Performed
,ermination of
employment
,erminated, retired
employees are paid
after finishing
ser!ice
&ystem !erification of all
staff o!er retirement age
%olicies to ensure non
attendance is taken up by
the super!isor
&tandard procedures for
informing personnel to
inform finance
0alidity Substantive tests:
or a sample of terminations e#amine personnel
files and determine whether+
,he termination was processed within a
reasonable time or at least before the ne#t
payment of salaries.
,he file represents reasonable
documentation including lea!e application,
sick sheets, promotion information, training
requirements, etc.
$nspect documentation to confirm that the
employee was e#cluded from the subsequent
salary run.