PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM 10 – 39 (Object!e 10 – 5"
Anthon Anthony y, CPA CPA, prepar prepared ed the flowch flowchart art (p. 330) 330) which which portray portrayss the raw materi materials als purchasing function of one of Anthony’s Anthony’s clients, Medium!i"ed Manufacturing Company, Company, from the preparation of initial documents through the #ouching of in#oices for payment in accounts paya$le. Assume that all documents are prenum$ered. Re#$%e&
%dentify the deficiencies in internal control that can $e determined from the flowchart. &se the metodo metodology logy discus discussed sed in this this chapte chapter. r. %nclud %ncludee intern internal al contro controll defici deficienc encies ies resulting from acti#ities performed or not performed.' A')e%
Accuracy Purc Purcha hase se reu reuisi isiti tion onss and and purc purcha hase se orde orders rs are not not comp compare ared d in the the stor stores es department. Although purchase orders are attached to purchase reuisitions in the stores department, there is no indication that any comparison is made of the two documents. Prior to attaching the purchase order to the purchase reuisition the reuisitioners functions should include a chec* that+ a. $. c. d.
Pric Prices es are are rea reaso sona na$l $le e -he uality of the materials ordered is accepta$le eli#e eli#ery ry dates dates are in in accorda accordance nce with with company company needs needs All pertine pertinent nt data on the purchase purchase order order and purch purchase ase reuisit reuisition ion (e.g., (e.g., uantities, specifications, deli#ery dates, etc.) are in agreement.
/ecau /ecause se the the reu reuisi isiti tion oner er will will $e char charge ged d for for the the mater material ialss orde ordere red, d, the the reuisitioner is the logical person to perform these steps. . -he purchase purchase office office does does not re#iew re#iew the in#oice in#oice prior prior to processin processing g appro#al. appro#al. -he purchase office should re#iew the #endors in#oice for o#erall accuracy and completeness, #erifying uantity, prices, specifications, terms, dates, etc., and if the in#oice is in agreement with the purchase order, recei#ing report, and purchase reuisition, the purchase office should clearly indicate on the in#oice that it is appro#ed for payment processing. -he appro#ed in#oice should $e sent to the accounts paya$le department.
1. -he copy copy of the purchase purchase order order sent to the recei#in recei#ing g room general generally ly should should not show show uanti uantitie tiess ordered ordered,, thus thus forcin forcing g the departm department ent to count count goods goods
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PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM
recei#ed. %n addition to counting the merchandise recei#ed from the #endor, the recei#ing department personnel should e2amine the condition and uality of the merchandise upon receipt. 3. -here is no indication of control o#er dollar amounts on #ouchers. Accounts paya$le personnel should prepare and maintain control sheets on the dollar amounts of #ouchers. !uch sheets should $e sent to departments posting transactions to the general ledger and master files. ote+ Classification, timing, and posting and summari"ation are not applica$le. 4ecording in 5ournals is not included in the flowcharts.
MULTIPL* +,OI+* -U*STIONS FROM +PA *.AMINATIONS 20 / 17 (Object!e 20/3"
-he following uestions concern internal controls in the payroll and personnel cycle. Choose the $est response.
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PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM a.
A factory foreman at !te$lec*i Corporation discharged an hourly wor*er $ut did not notify the human resources department. -he foreman then forged the wor*er’s signature on time cards and wor* tic*ets and, when gi#ing out the chec*s, di#erted the payroll chec*s drawn from the discharged wor*er to his own use. -he most effecti#e procedure for pre#enting this acti#ity is to () reuire written authori"ation for all employees added to or remo#ed from the payroll. (1) ha#e a paymaster who has no other payroll responsi$ility distri$ute the payroll chec*s. (3) ha#e someone other than persons who prepare or distri$ute the payroll o$tain
custody of unclaimed payroll chec*s. (6) from time to time, rotate persons distri$uting the payroll. $. An auditor found that employee time records in one department are not properly
c.
appro#ed $y the super#isor. 7hich of the following could result8 () uplicate paychec*s might $e issued. (1) -he wrong hourly rate could $e used to calculate gross pay. (3) 9mployees might $e paid for hours they did not wor*. (6) Payroll chec*s might not $e distri$uted to the appropriate employees. -he purpose of segregating the duties of hiring personnel and distri$uting payroll chec*s is to separate the () human resource function from the controllership function. (1) administrati#e controls from the internal accounting controls. (3) authori"ation of transactions from the custody of related assets. (6) operational responsi$ility from the record*eeping responsi$ility.
20 / 1 (Object!e 20/3"
-he following uestions concern audit testing of the payroll and personnel cycle. Choose the $est response. a.
7hen control ris* is assessed as low for assertions related to payroll, su$stanti#e tests of payroll $alances most li*ely would $e limited to applying analytical
procedures and () o$ser#ing the distri$ution of payroll chec*s. (1) footing and crossfooting the payroll register. (3) inspecting payroll ta2 returns. (6) recalculating payroll accruals. $. A common audit procedure in the audit of payroll transactions in#ol#es tracing selected
items
from
the
payroll
5ournal
to
employee
time
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PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM cards that ha#e $een appro#ed $y super#isory personnel. -his procedure is designed
to
pro#ide
e#idence
in
support
of
the
audit
proposition
that () only proper employees wor*ed and their pay was correctly computed. (1) 5o$s on which employees wor*ed were charged with the appropriate la$or cost. (3) internal controls o#er payroll dis$ursements are operating effecti#ely. (6) all employees wor*ed the num$er of hours for which their pay was c.
computed. %n performing tests concerning the granting of stoc* options, an auditor should () confirm the transaction with the !ecretary of !tate in the state of incorporation. (1) #erify the e2istence of option holders in the entity’s payroll records or stoc* ledgers. (3) determine that sufficient treasury stoc* is a#aila$le to co#er any new stoc* issued. (6) trace the authori"ation for the transaction to a #ote of the $oard of directors.
DIS+USSION -U*STIONS AND PROL*MS 20 / 19 (Object!e 20/2 20/3"
%tems through : are selected uestions typically found in internal control uestionnaires used $y auditors to o$tain an understanding of internal control in the payroll and personnel cycle. %n using the uestionnaire for a client, a ;yes< response to a uestion indicates a possi$le internal control, whereas a ;no< indicates a potential deficiency. . oes an appropriate official authori"e initial rates of pay and any su$seuent changes in rates8 1. Are formal records such as time cards used for *eeping time8 3. %s appro#al $y a department head or foreman reuired for all time cards $efore they are su$mitted for payment8 6. oes anyone #erify pay rates, o#ertime hours, and computations of gross payroll $efore payroll chec*s are prepared8
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PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM =. oes an adeuate means e2ist for identifying 5o$s or products, such as wor* orders, 5o$ num$ers, or some similar identification pro#ided to employees to ensure proper coding of time records8 >. %s the issuance of payments to employees independent of time*eeping8 ?. Are employees reuired to show identification to recei#e paychec*s8 :. Are written notices reuired documenting reasons for termination8 Re#$%e&
a.
@or each of the uestions, state the transactionrelated audit o$5ecti#e(s) $eing
fulfilled if the control is in effect. $. @or each control, list a test of control to test its effecti#eness. c. @or each of the uestions, identify the nature of the potential financial misstatement(s) if the control is not in effect. d. @or each of the potential misstatements in part c, list a su$stanti#e audit procedure for determining whether a material misstatement e2ists
A')e%
N
1
3
6
T%'ct'/Rete& A$&t Object!e 4ecorded payroll transactions are stated at the proper pay rates (accuracy) ours wor*ed are correctly recorded (accuracy)
4ecorded payroll payments are for wor* actually performed $y e2isting employees 4ecorded payroll transactions are for proper rate and amount (accuracy)
Tet 6 +'t%
Pte't S$bt't!e $&t Mttee't 8%ce&$%e 92amine 9mployees are Compare rates in authori"ations in paid the wrong payroll 5ournal or personnel files. rate listing to rates in personnel files. 92amine time %ncorrect 4andomly sample cards and o$ser#e recording of time wor*ers and trace to preparation time cards for hours wor*ed 92amine time %ncorrect times Analy"e payroll cards for appro#al are used in records of a sample of computing employees for employees pay reasona$leness
92amine payroll 9mployees pay is 4ecompute employees 5ournal or listing miscalculated pay, compare pay rates for indication of to personnel files, and internal hours wor*ed to time #erification cards
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PRAKTIK AUDIT LANJUTAN RINI FITRIASTUTI 1527000040 MAKSI – MALAM
=
>
?
:
-ime records are properly classified $y 5o$ (classification) 4ecorded payroll chec*s are for wor* performed $y e2isting employees (occurrence) Payments are made to actual employees (occurence)
4ecorded transactions (occurrence)
92amine system of identifying 5o$s $y num$er B$ser#e and discuss payroll system with employees
irect la$or is charged to wrong 5o$s Payroll payments are made to none2itent employees
-race entries from 5o$ summaries to time cards, 5o$ cards, etc -race payroll payments to employees to determine if employee e2ists
B$ser#e payments discuss employees
Payroll payments 92amine cancelled and are made to chec*s for with wrong employees endorsements, and compare to personnel file payroll 92amine 9mployees are Compare termination e2ist personnel files for improperly dates from personnel termination terminated and files to date of last notices payment paychec* continues
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