Learn how an auditor should check the salaries to audit effectively. Understand the importance of reviewing payroll records. When it comes to auditing the financial statements of a company, one of the most crucial tasks for an auditor is to verify the accuracy of the salaries paid to employees. However, this process can be quite complex and requires a thorough understanding of the payroll system and relevant regulations. In this article, we will discuss how an auditor should check the salaries to audit effective.
How Auditor Should Check The Salaries To Audit
(1) INTERNAL CONTROL
The auditor should check the internal control system. There must be effective system of internal control relating to salaries.
PROPER AUTHORITY
Auditor should see that there is proper authority or not for payment of salaries.
SALARIES BOOK
The auditor can compare the Cash Book with Salaries Book.
SALARIES PAYMENT REGISTER
The auditor should vouch the salaries payment Register. He should check the name and signature against every amount paid.
UNPAID SALARIES
The auditor should examine that workers who are on leave due to personal reason, salaries of such workers deposited back into the bank account.
CHECKING OF SIGNATURE
The auditor should check the signatures or thumb impressions of workers for current and previous months.
TAX DEDUCTION CERTIFICATE
Tax from salary is deducted by employer. So salary can be confirmed from tax deduction certificate issued to the employee.
MINUTE BOOK
The auditor should check the minute book to see that payment has been approved by the directors or owners.
Conclusion
In conclusion, auditing salaries is a critical component of the financial statement audit process. By following the steps outlined in this article, an auditor can effectively check the salaries paid to employees and ensure the accuracy and completeness of the financial statements. It is essential for auditors to exercise due diligence and professionalism when conducting salary audits to maintain their credibility and trustworthiness