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CS Professional · Internal and Forensic Audit · Internal Audit of Specific Functions

During an internal audit of payroll at Kaveri Textiles Ltd, the auditor wants to confirm that every name on the monthly payroll register belongs to a real, currently employed person. Which procedure is most directly aimed at detecting ghost employees?

Physically verifying employees on the payroll against attendance records and HR files, preferably by a surprise muster, is the procedure aimed at ghost employees. It tests whether each person on payroll actually exists and is employed, whereas recomputation or budget comparison tests only accuracy or reasonableness.

  1. ARecomputing the provident fund contribution for a sample of employees
  2. BPhysically verifying employees on the payroll register against attendance records and HR files, ideally through a surprise musterCorrect
  3. CComparing this month's total salary cost with the budget
  4. DChecking that the payroll register is arithmetically accurate

Explanation

Ghost employees are fictitious or departed persons kept on payroll. A surprise physical verification of employees, matched with HR records and attendance, tests existence directly. Recomputing PF or checking totals and budgets tests accuracy or reasonableness and would not reveal a non-existent person.

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