Chris Thiell

2/19/2015
Audit Intern, Gorfine, Schiller, and Gardyn P.A., Payroll Testing Example, CriticalThinking
What I Have Done:
This is a basic payroll test that is done at most audits. It tests that the clients
payroll was correctly paid and that their internal controls are functioning as planned
by selecting payroll periods and a group of employees to test. In this particular
case, we wanted to get 40 items to test, so we decided to test 30 employees for two
payroll periods knowing that not everyone haphazardly selected would be working
that particular week chosen, might be out on long-term leave, might not be hired
yet, or could be terminated before the week tested. We tested the accuracy of their
payroll staff by seeing if the hours on the payroll register and the time card
matched, if the amount paid on the payroll register reconciled to our recalculation
based on the time card, and also that the salary/hourly rate in their personnel file
also matched the amount on the payroll register. In addition, we also tested
internal controls by checking the employees personnel files for the Form W4s and
their I9s. We also tested internal controls for terminated employees by verifying
that there were no payroll items for them post-termination, and that they were
taken off of the payroll system in a short, timely manner post-termination. One
thing that happened on this particular payroll was an error by the payroll staff. The
one individual was not paid the proper amount as seen in the red highlighted row.
We had another mistake by the payroll staff as well, however it was resolved with
documentation by the staff after we had finished additional testing. When we had
thought we had two discrepancies we elected to test 12 additional items, using 8
employees for two new payroll periods. With doing so we raised the risk
assessment for the audit plan for next year. After the additional testing was
completed and we saw the correcting entry the week after the week we were
testing then that was no longer considered a deviation.
What It Means To Me:
For me, this test shows my ability to analyze a fairly large amount of data and draw
conclusions from it. In this particular case, with having an error in our testing, it
was neat to see the process when something like that occurs. When we originally
believed there to be two deviations, thats when the additional testing was needed.
Even though it was negligible after the second discrepancy was found to have been
corrected the week after, I still learned a lot about testing and what happens when
errors are found. Being the one to do the testing also gave me piece of mind for my
own jobs throughout the years. I was very weary growing up that there was a
chance I might not get paid right if someone makes a mistake. Seeing all that the
payroll staff had to go through with reconciling payroll amounts, calculating and
recalculating for accuracy, signoff authorizing this payment and that payment, etc.
It is a lot, and the fact that any mistake was detected was very surprising. It was
also cool to be on an audit and be the one to find something. To me it showed that I

was capable of finding a tiny error that might be part of something huge had it not
been in payroll. It was very gratifying that I did my job right.

Where It Leads Me:

After having the experience of doing so much testing during my time with GSG, I
feel that I have learned so much about why things are tested, how they are tested,
and what happens as a result of the testing. From an external auditors perspective
I now know what kinds of things are tested on audits as well as the types of things
to look for on various types of testing. However from an internal perspective, if I
were part of a company being audited, I know the types of things that they would
be looking for and can better assist them and predict the types of items that they
might need during the process. I think that it will be a good asset to carry with me
wherever I begin working full time. Being able to see a different perspective helps a
lot with critical-thinking and I know from doing audit testing with my internship it
will be a great asset to a company later on.