In testing the payroll of a large company, the auditor wants to establish that the individuals included in a sample actually were employees of the company during the period under review. What will be the best source to determine this?
A)Telephone contacts with the employees.
B)Tracing from the payroll register to the employee's earnings records.
C)Confirmation with the union or other independent organization.
D)Examination of Human Resource Department records.

Question

Quizplus · Accepted Answer

Examination of Human Resource Department records would be the best source to determine if the individuals included in a sample were actual employees during the period under review. The Human Resource Department maintains the official employment records including the date of employment, employee status, salary, and benefits. This will provide the auditor with reliable information to verify the accuracy of the payroll. Telephone contacts with the employees may not be accurate or reliable, the tracing from the payroll register to the employee's earnings records may not prove if the employee was actually employed, and confirmation with the union or other independent organization may not provide the necessary information as not all employees may be affiliated with a union or any other independent organization.

In Testing the Payroll of a Large Company, the Auditor