Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Wages
- This topic has 3 replies, 2 voices, and was last updated 5 years ago by Kim Smith.
- AuthorPosts
- November 16, 2019 at 10:45 am #552771
Substantive procedure for completeness and accuracy:
1.Select sample of pay slips of the employees and compare it with payroll to ensure all the transactions has been recorded to ensure completeness.Is this right?
November 16, 2019 at 1:57 pm #552788From “source” to the financial statements is the direction of testing for completeness …
From the financial statements to “source” is the direction of testing for existence.So if you think about a payroll system ,,,
Time records (e.g. clock cards/timesheets) -> payroll calculations -> payroll processing/payslips -> totals recorded in ledger a/cs -> included in financial statements.Since nowadays processing of the payroll/payslips is one and the same process, the more relevant test for completeness would be to start with timesheets … trace hours to payslips … etc.
But actually, the greater risk of misstatement in the payroll is OVER rather than understatement (consider – if you weren’t paid for hours you’d work you would complain!) Overstatement could arise, for example, if employees are paid for hours not worked – or paid at too high a rate, etc – this doesn’t have to be fraud (e.g. “dummy” employees) – but could simply be errors – only they’re less likely to be reported by employees (who minds being overpaid?!?!) So the direction of testing from payslips is more likely to be “backwards” to the time records – to ensure that hours were worked/overtime hours were authorised.
November 18, 2019 at 11:33 am #552989So the right test for completeness can be:
-Select sample of time sheets and match it with payroll data to verify that same has been recorded to ensure completeness and accuracy?
-For payslips, Inspect sample of payslips and match it with payrolll records and timesheets to verify that the same hours has been paid for and recorded in the system?November 18, 2019 at 11:46 am #552991Your 1st is a test for completeness but your 2nd is a test for occurrence – because you are going “backwards” what from has been paid for and agreeing to timesheets that the hours were worked (i.e. a valid expense for the entity).
- AuthorPosts
- You must be logged in to reply to this topic.