Internal Auditing Last Case Study

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Circumstance

You are definitely the internal taxation senior responsible for conducting an assurance engagement from the XYZ Company payroll process. This process is not audited for three years and, as such, is due in the usual audit routine. There have been zero significant adjustments since the past audit, that is certainly, there were no system improvements, no reorganization of employees, and no substantive procedural adjustments. However , over the last assurance diamond, the internal review function discovered several observations, some of which had been considered significant. The significant findings related to: Info pertaining to workers leaving the corporation was not conveyed to the IT department, causing extended holds off before those employees' devices rights had been terminated. Several hours paid to non-exempt employees were not supported by approved timesheets. Amounts help back for employees are not consistent with polls made by employees. The possibility been around that phantom (ghost) staff could be as part of the payroll with out detection. Salaries management integrated actions to address all significant observations plus the internal review function done limited girl procedures to validate that that planned actions had been completed. This can be a first review since the a muslim procedures had been completed. The following is pertinent data to the payroll assurance involvement: XYZ utilizes approximately some, 400 personnel. Approximately a couple of, 700 of those employees will be salaried, the others are on an hourly basis. Employees are paid biweekly.

Hourly personnel earn pay at right time for the first 80 hours in a biweekly spend period, time and a fifty percent for the next twenty hours in a pay period, and twice time for any hours exceeding beyond 100 several hours in a spend period. The business utilizes a widely used and market examined payroll package deal (PayRight) intended for processing coming from all payroll deals. The payroll system cadre with the basic ledger system. XYZ has established a separate payroll imprest take into account the control of salaries checks. Amounts are lodged in this bank account from the industry’s general accounts to cover any checks provided against the imprest account every day. Certain non-payroll items are subtracted from the payroll checks which includes: Employee financial loans to cover the expense of extra benefits or pc purchases. Advantages to long term retirement programs.

Contributions to charitable organizations, such as the United Approach. Contributions to Political Action Committees (PACs).

Payroll bills, and the related payroll accruals, are considered material to the company. Based on these information, perform the following procedure for conduct a payroll assurance engagement. A. Determine for least several payroll section objectives that could be relevant to this engagement. B. Create a set of potential risk scenarios for each and every objective. C. Based on the identified risk scenarios, define and assess the key payroll risks. 1 . You will need to produce assumptions regarding impact and likelihood for this assessment. File the assumptions made. 2 . Also, produce assumptions about and record process-level management's risk tolerance levels. D. Document any process circulation in a in depth flowchart. Make certain that this flowchart identifies important risks and controls and has for least one potential design and style inadequacy. At the. Develop potential key efficiency indicators pertaining to the process you documented in coordination D. N. Identify which usually controls are thought key controls. As part of this analysis, file your assumptions regarding the effectiveness of entity-level controls and just how such regulates affect the salaries process-level handles, if at all. G. Link the real key controls towards the identified risks.

H. Prepare a Risk and Control Matrix to cover the right information via steps C through G. Conclude on the overall style adequacy with the payroll process. I. Create a test cover gathering data regarding the functioning effectiveness of all key controls....

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