Answer Happy

This is from Auditing
QUESTION TWO
Aubrey is president
of Hedgeway Motors. Since there is no internal audit department, he
had asked the accounting area to evaluate the controls governing
the payroll function. He thought that since the payroll department
was a subunit of the accounting department, the accounting staff
would have the necessary knowledge of operations to provide an
independent evaluation. As a result, the assistant controller was
assigned the responsibility of conducting an internal audit. The
assistant controller did not have any internal audit experience but
understood the payroll operation. He had researched internal audit
processes and felt that he could conduct an evaluation of the
system of controls. He mapped out the processes and identified the
controls in payroll. Once the controls were identified, he tested
for compliance and reviewed the operations for efficiency. At the
conclusion of the work he compiled the results and prepared the
audit report.
Jonathon received
the report and wanted a second opinion on its contents from a
qualified professional. He asked you, a CGA, to provide an opinion
on whether this met the objectives of a regular audit report and,
if not, what was missing or could have been improved.
The report was as follows:
Background information
The payroll
department processes payroll data for all employees and ensures
that source deductions are made and remitted to the appropriate
government authorities. The department also ensures the timely and
secure processing of employee payments that are accurate and
complete.
Audit observations
Recommendation:
The payroll
department should reconcile actual payments against the expected
payments on a weekly basis to reduce errors to an acceptable
level.
Recommendation:
Payroll must
implement information system controls to ensure that employee
information is validated and corrected prior to processing
payments.
Recommendation:
Additional
resources must be added to the payroll department to ensure that
all tasks and responsibilities are completed in a timely and
cost-efficient manner.
Audit conclusion
Based on the results
of the audit, I have concluded that the system of controls in place
is satisfactory and that minimal corrective action is required to
mitigate any risks to the company.
Required