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recalculation V/s proof in total

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › recalculation V/s proof in total

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by Kim Smith.
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  • July 23, 2021 at 8:25 am #629176
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    Greeting maam! Hope you had a great time with your parents!

    Maam i have a doubt in the following statement:

    “Perform a proof in total of total wages and salaries, incorporating joiners and leavers and the annual pay increase. Compare this to the actual wages and salaries in the financial statements and investigate any significant differences.”

    Maam how is this process any different from “Recalculation of wages and salaries”?

    I read Ken Garett sir’s response however it seemed very specific. Can you explain the GENERAL/BROAD difference between the two procedures? and take this scenario as an example?

    July 23, 2021 at 9:04 am #629190
    Kim Smith
    Keymaster
    • Topics: 88
    • Replies: 6090
    • ☆☆☆☆☆

    You wouldn’t recalculate the entire payroll – that would mean for every employee recalculating their net pay and summing all the net pays to get the payroll total. A proof “in total” makes simplifying assumptions e.g. 100 employees paid $8 – $10 an hour – so say $9, work 220 days a year for 8 hours a day – you would expect the annual cost to be in the region of 100 x $9 x 220 x 8 = $1.584m
    That would be compared with the expense per the G/L – if the difference is not material, it doesn’t require further investigation(!)

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