The following audit procedures are typical of those found in auditing the payroll and personnel cycle:
1. Examine owner approval of rates of pay and withholdings.
2. Examine evidence that payroll hours and wage rates are verified by an independent
person.
3. Select a sample of 40 entries in the payroll journal and trace each to an approved time card.
4. Compute payroll tax expense as a percentage of total wages, salaries, and commissions.
5. Scan journals for all periods for unusual transactions to determine whether they are
recorded correctly.
6. Use audit software to account for the numerical sequence of cancelled payroll checks.
7. Select a sample of 20 payroll payments and trace to payroll journal entries for name,
date, and amounts.
8. Obtain a schedule of all payroll liabilities and trace to the general ledger.
9. Discuss with management any payroll liabilities recorded in the prior year that are
not provided for in the current period.
10. Review board of director meeting minutes to verify the salary for the chief executive officer.
a. Select the type of test for each audit procedure from the following:
(1) Test of control
(2) Substantive test of transactions
(3) Substantive analytical procedure
(4) Test of details of balances
b. For each test of control or substantive test of transactions, identify the applicable
transaction-related audit objective(s).
c. For each test of details of balances, identify the applicable balance-related audit
objective(s).
