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Dodgers Case 3.1

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Submitted By jas06ab
Words 1918
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Case 3.1
Jessica Kelley-Seamans
Acc-412

1- Identify the key objectives for a client’s payroll function. Comment on objectives related to tests of controls and substantive audit procedures.
The payroll functions include * employment ( HR) * timekeeping * payroll preparation and recordkeeping * Pay distribution
(Whitman, pg 626)
Each of these payroll actions should be kept separate from one another, in accordance with proper segregation of duties. Segregation of duties can be described as the separation of related procedures that will prevent employees and officers from committing fraud. The duties that should be kept separate are authorization, record keeping, and custody. According to the AICPA,” no single individual should be able to (1) authorize a transaction, (2) record the transaction in the accounting records, and (3) maintain custody of the assets resulting from the transaction”( Members in Government Guide to Internal control, pg 10). The key objectives for a client’s payroll function are * Occurrence and existence * Accuracy * Completeness * Presentation and disclosures
(Key Audit Objectives for a Client's Payroll Function). I will now go over each objective, and discuss the related tests of controls and substantive audit procedures. Just too quickly review, tests of controls focus on the functionality of the controls themselves, and substantive procedures focus on direct verification of the output of the controls. For example,
-Occurrence and existence refers to the need for the dodgers to verify all payments were made to actual employees In relation to occurrence and existence, proper tests of controls should include tests for separation of duties. There should also be reviews of active employees to verify all active employees are currently employed. Substantive audit procedures may include

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