Question

What are some of the challenges and issues auditors face when performing an audit of payroll?

Answer 1

Following are the challenges that may appear in payroll audit.

1. The payroll procedures may be manipulated easily with inaccurate timesheet data.

2. There may be very little personal information about employees. This may indicate ghost employees.

3. There may be very few or no deductions from the payroll again indicating fake employees.

4. There may be multiple duplicate payments which may be indicated by missing checks or cheques issued for incorrect amount.

5. Terminated employees may still be paid and this needs to be verified.

6. The proper authorisation and internal controls may not have been followed.