INTERNATIONAL CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS IN BUSINESS

 SECTION 200 – APPLYING THE CONCEPTUAL FRAMEWORK

o 200.2 A professional accountant in business might be an employee, contractor, partner, director, owner or volunteer of an
employing organization.
o 200.3 Investors, creditors, employing organizations and other sectors of the business community as well as governments and
the general public, might rely on the work of professional accountants in business.
o 200.4 The term “professional accountant” refers to: a. Professional accountant in business and b. An individual who is a
professional accountant in public when performing professional activities pursuant to the accountant’s relationship with the
accountant’s firm, whether as contractor as a contractor employee or owner.
o 200.5 A professional accountant shall comply with the fundamental principles and apply the conceptual framework set out to
identify, evaluate and address threats to compliance with the fundamental principles
o 200.6 Identifying threats: a. self-interest b. self-review c. advocacy d. familiarity e. intimidation
o 200.7 Evaluating threats - Professional accountants might consider obtaining legal advice where they believe that unethical
behavior or actions by others have occurred, or will continue to occur, within the employing organization
o 200.8 Addressing threats - In extreme situations, if the circumstances that created the threats cannot be eliminated and
safeguards are not available or capable of being applied to reduce the threat to an acceptable level, it might be appropriate for
a professional accountant to resign from the employing organization.
o 200.9 Communicating with those charged with governance - In determining with whom to communicate, a professional
accountant might consider:
 Nature and importance of the circumstance and
 The matter to be communicated
 SECTION 210 – CONFLICT OF INTEREST
A professional accountant shall not allow a conflict of interest to compromise professional or business judgment.
o 210.5 Conflict Identification - A professional accountant shall take reasonable steps to identify circumstances that might create
a conflict of interest. Such steps include identifying the ff:
 The nature of the relevant interest and relationships between the parties involved and
 The activity and its implication for relevant parties
o 210.7 Threats created by conflict of interest – Actions that might address threats created by conflicts of interest:
 Restructuring or segregating certain responsibilities and duties
 Obtaining appropriate oversight
o 210.9 Disclosure of consent – When addressing a conflict of interest, the professional accountant is encouraged to seek
guidance from within the employing organization or from others, such as professional body, legal counsel or another
accountant.
 SECTION 220 – PREPARTION AND PRESENTATION OF INFORMATION
o Stakeholders to whom, or for whom such information is prepared or presented include: a. management and those charged with
governance, b. investors and lenders or other creditors, c. regulatory bodies.
o When preparing or presenting information, a professional accountant shall:
 Prepare or present the information in accordance with a relevant reporting framework.
 Avoid undue influence of, or undue reliance on, individuals, organizations or technology; and
 Exercise professional judgment to Prepare or present the information in a manner that is intended neither to mislead
nor to influence contractual or regulatory outcomes inappropriately;
 Not omit anything with the intention of rendering the information misleading or of influencing contractual or
regulatory outcomes inappropriately;
 Be aware of the risk of bias.
o 220.7 Relying on work of others – when relying to the work of other individuals (internal or external), exercise professional
judgment.
 Factors to consider whether reliance on others is reasonable:
 Reputation and expertise of the other individual
 Whether the other individual is subject to applicable professional and ethics standards
 Addressing information that is or might be misleading
 Discussing concerns that the information is misleading with the professional accountant’s superior and/or
the appropriate level(s) of management and requesting such individuals to take appropriate action to
resolve the matter.
 Consulting the policies and procedures of the employing organization (for example, an ethics or whistle-
blowing policy) regarding how to address such matters internally.
 Documentation
o The facts
o Accounting principles or other relevant standards involved
o The communications and parties with whom the matters were discussed
o The courses of action considered
o How the accountant attempted to address the matter(s)
 SECTION 230 – ACTING WITH SUFFICIENT EXPERTISE
o Acting without sufficient expertise creates a self-interest threat to compliance with the principle of professional competence
and due care.
 o A professional accountant shall not intentionally mislead an employing organization as to the level of expertise or experience
possessed.
o The principle of professional competence and due care requires that a professional accountant only undertake significant tasks
for which the accountant has, or can obtain, sufficient training or experience.
 SECTION 240 FINANCIAL INTERESTS, COMPENSATION AND INCENTIVES LINKED TO FINANCIAL REPORTING AND DECISION MAKING
Having a financial interest, or knowing of a financial interest held by an immediate or close family member might create a self-
interest threat to compliance with the principles of objectivity or confidentiality
o A professional accountant shall not manipulate information or use confidential information for personal gain or for the financial
gain of others. Financial interests include those arising from compensation or incentive arrangements linked to financial
reporting and decision making.
o Factors that are relevant in evaluating the level of such threat:
 The significance of the financial interest.
 Policies and procedures for a committee independent of management
 Internal and external audit procedures that are specific to address issues that give rise to the financial interest
 SECTION 250 - INDUCEMENTS, INCLUDING GIFTS AND HOSPITALITY
o An inducement is an object, situation, or action that is used as a means to influence another individual’s behavior, but not
necessarily with the intent to improperly influence that individual’s behavior. Inducements can range from minor acts of
hospitality between business colleagues to acts that result in noncompliance with laws and regulations.
o Examples of inducements:
 Gifts
 Hospitality
 Entertainment
 Political or charitable donations
 Appeals to friendship and loyalty
 Preferential treatment, rights or privileges.
o Inducement prohibited by laws and regulations – those related to bribery and corruption
o Inducement not prohibited – The offering or accepting of inducements that is not prohibited by laws and regulations might still
create fundamental principles.
o 250.7 A professional shall not offer or encourage others to offer (250.8 not accept, encourage others to accept) any
inducement with the intent to improperly influence the behavior of the recipient or of another individual.
o 250.9 An inducement is considered as improperly influencing an individual’s behavior if it causes the individual to act in an
unethical manner. The fundamental principles are an appropriate frame of reference for a professional accountant in
considering what constitutes unethical behavior on the part of the accountant and, if necessary by analogy, other individuals
 The determination of whether there is actual or perceived intent to improperly influence behavior requires the
exercise of professional judgment. Relevant factors to consider might include:
 Nature, frequency, value, and cumulative effect
 Whether the inducement is an ancillary part of a professional activity
 Whether the inducement is a customary or cultural practice in the circumstances
 ·Whether the professional accountant knows, or has reason to believe, that accepting the inducement
would breach the policies and procedures of the counterparty’s employing organization
o 250.11 If such an inducement is trivial and inconsequential, any threats created will be at an acceptable level.
o 250.13 Where the professional accountant becomes aware of an inducement being offered to or made by an immediate or
close family member and concludes there is intent to improperly influence the behavior and informed third party would be
likely to conclude such intent exists, the accountant shall advise the immediate or close family member not to offer or accept
the inducement. One of the relevant factors is the nature or closeness of the relationship between:
 The accountant and the immediate or close family member
 The immediate or close family member and the counterparty; and
 The accountant and the counterparty
 SECTION 260 - RESPONDING TO NON-COMPLIANCE WITH LAWS AND REGULATIONS
o When a professional accountant becomes aware of noncompliance or suspected noncompliance, self-interest or intimidation
threat arises.
o Non-compliance with laws and regulations (“noncompliance”) comprises acts of omission or commission, intentional or
unintentional, which are contrary to the prevailing laws and regulations committed by the following parties:
 Professional accountant of the employing company
 management and those charged with governance
 other employees of the employing organization
o 260. 6 When encountering such non-compliance or suspected non-compliance, the accountant shall obtain an understanding of
those legal or regulatory provisions and comply with them, including;
 Any requirement to report the matter to an appropriate authority; and
 Any prohibition on alerting the relevant party.
o 260.8 Management and those charged with governance are responsible for ensuring that the business activities are conducted
in accordance with laws and regulations. They are also responsible for identifying and addressing any non-compliance.
o 260.9 Responsibilities of professional accountants – determine how to respond to such non-compliance and take the steps on a
timely basis.
 o 260.11 Responsibilities of senior professional accountant in business – obtain understanding of the matter: a. nature of non-
compliance, b. application of the relevant laws and regulations, c. assessment of potential consequences.
o 260.12 The accountant is not expected to have a level of understanding of laws and regulations. Whether an act constitutes
non-compliance is ultimately a matter to be determined by a court or other appropriate adjudicative body.
o 260.19 Seeking advice – internally or externally (obtaining legal advice or consulting on a confidential basis with a regulatory
body or professional body)
o 260.20 Disclosure of the matter to an appropriate authority would be precluded if doing do would contrary to law or regulation.
 SECTION 270 – PRESSURE TO BREACH THE FUNDAMENTAL PRINCIPLES
o 270.2 Pressure exerted on, or by, a professional accountant might create an intimidation or other threat to compliance with
one or more of the fundamental principles.
o 270.3 Pressure might be explicit or implicit and might come from:
 Within the employing organization, for example, from a colleague or superior.
 An external individual or organization such as a vendor, customer or lender.
 Internal or external targets and expectations.
270.3 A3 Factors that are relevant in evaluating the level of threats created by pressure include:
 Intent of the individual
 Application of laws, regulations, and professional standards
 Culture and leadership of the employing organization
 Policies and procedures of the employing organization such as ethics or human resource policies
270. 3 Discussion of the circumstances
 To the individual who is exerting the pressure
 To the accountant’s superior, if the superior is not the individual exerting pressure
 Escalating the matter within the employing organization
 Disclosing the matter in line with the employing organization’s policies (ethics and whistleblowing policies)
 Consulting with: a. colleague, superior, human resource personnel, or another professional accountant, b. relevant
professional or regulatory bodies or industry associations, c. legal counsel.

INTERNATIONAL CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE

 SECTION 200 – THREATS AND SAFEGUARDS
A professional accountant in public practice shall not knowingly engage in any business, occupation, or activity that impairs or might
impair integrity, objectivity, or the good reputation of the profession and as a result would be incompatible with the fundamental
principles. Compliance may be threatened by a broad range of circumstances and relationships.
o Threats – fall into one or more of the following categories: a. self-interest b. self-review c. advocacy d. familiarity e. intimidation
o Safeguards – are actions or other measures that may eliminate threats or reduce them to an acceptable level. They fall into two
broad categories: a. safeguards created by the profession, legislation, or regulation b. safeguards in the work environment
 SECTION 210 – PROFESSIONAL APPOINTMENT (CLIENT ACCEPTANCE)
o Before accepting a new client, determine whether acceptance would create threats to compliance with the fundamental
principles.
o Potential threats to integrity or professional behavior may be created from, for example, questionable issues associated with
the client.
o Client involvement in illegal activities, dishonesty or questionable financial reporting practices.
o Evaluate the significance of any threats and apply safeguards when necessary to eliminate them or reduce them to an
acceptable level.
o Where it is not possible to reduce the threats to an acceptable level, the professional accountant in public practice shall decline
to enter into the client relationship.
o Periodically review acceptance decisions for recurring client engagements.
 SECTION 220 – CONFLICT OF INTEREST
A conflict of interest creates a threat to objectivity and may create threats to the other fundamental principles.
o A professional accountant shall not allow a conflict of interest to compromise professional or business judgment.
o In case of assurance service, compliance with the principle of objectivity also requires being independent of assurance clients.
o Self-interest, self-review, advocacy, familiarity, and intimidation are the potential threats which may lead to conflicts of interest
and lack of independence.
 SECTION 230 – SECOND OPINIONS
Situations where a professional accountant in public practice is asked to provide a second opinion on the application of accounting,
auditing, reporting, or other standards or principles to specific circumstances or transactions by or on behalf of an entity that is not an
existing client may create threats to compliance with the fundamental principles.
o Evaluate the significance of any threats and apply safeguards.
o If the company or the entity is seeking the opinion will not permit communication with the existing accountant, a professional
accountant in public practice shall determine whether, taking all the circumstances into account, it is appropriate to provide the
opinion sought.
 SECTION 240 – FEES AND OTHER TYPES OF REMUNERATION
o When entering into negotiations regarding professional services, a professional accountant in public practice may quote
whatever fee is deemed appropriate. Nevertheless, there may be threats to compliance with the fundamental principles arising
from the level of fees quoted.
 o The significance of any trust shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to
an acceptable level.
o Contingent fees are fees calculated on a predetermined bases relating to the outcome of a transaction or the result of the
services performed by the firm. They may create a self-interest threat to objectivity. But as per ICAP Bye-laws it is treated as
professional misconduct.
 SECTION 250 – MARKETING PROFESSIONAL SERVICES
o When a professional accountant in public practice solicits new work through advertising or other forms of marketing, there may
be a threat to compliance with the fundamental principles.
o A professional accountant in public practice shall not bring the profession into disrepute when marketing professional services.
o The professional accountant in public shall be honest and truthful, and not: a. make exaggerated claims for services offered,
qualifications possessed, or experience gained b. make disparaging references of unsubstantiated comparisons to the work of
another.
 SECTION 260 – GIFTS AND HOSPITALITY
o A professional accountant in public practice, or an immediate or close family member, may be offered gifts and hospitality from
a client. Such an offer may create threats to compliance with the fundamental principles.
o The existence and significant of any threat will depend on the NATURE, VALUE, AND INTENT OF THE OFFER.
o A professional accountant in public practice shall evaluate the significance of any threats and apply safeguards when necessary
to eliminate the threats or reduce them to an acceptable level otherwise, do not accept the offer.
 SECTION 270 – CUSTODY OF CLIENT ASSETS
o A professional accountant in public practice shall NOT assume custody of client’s assets UNLESS permitted to do so by law and,
if so, in compliance with any additional legal duties.
o The holding of client assets created threats to compliance with the fundamental principles. A professional accountant in P.A
entrusted with money belonging to others shall:
 Keep such assets SEPARATELY from personal or firm assets
 Use such assets ONLY for the purpose for which they are intended.
 At all times, be ready to account for those assets and any income, dividends, gains generated, to any persons entitled
to such accounting
 Comply with all relevant laws and regulations relevant to the holding of and accounting for such assets.
o As part of client and engagement acceptance procedures for services that may involve the holding of client assets, a
professional accountant in public practice shall make appropriate inquiries about the source of such assets and consider legal
and regulatory obligations.
 SECTION 280 – OBJECTIVITY – ALL SERVICES
1. A professional accountants in P.A shall determine when providing any professional services whether there are threats to
compliance with the fundamental principle of objectivity resulting from having interests in, or relationships with, a client or its
directors, officers or employees.
2. A professional accounts in P.A who provides an assurance services shall be independent of the assurance client. Independence
of mind and in appearance is necessary.
3. The existence of threats to objectivity when providing any professional service will depend upon the particular circumstances of
the engagement and the nature of the work that the professional accountant in P.A is performing.
4. A professional accountant in P.A shall evaluate the significance of any threats and apply when necessary to eliminate them or
reduce them to an acceptable level otherwise, decline or terminate the engagement. Example of such safeguards include:
 Withdrawing from the engagement tam
 Supervisory procedures
 Terminating the financial or business relationship giving rise to the threat
 Discussing the issue with higher levels of management within the entity or with TCWG
 SECTION 290 AND 291
1. Independence – audit and review engagements – It addresses independence requirements for audit and review engagements
which are assurance engagements where a public accountant in P.A expresses a conclusion on historical financial information
2. Independence – other assurance engagements – it addresses independence for assurance engagements that are not audit or
review engagements of historical financial information, referred in the code as other assurance engagement.

SARBANES-OSXLEY ACT
 Sponsored by Paul Sarbanes and Michael Oxley
 Also known as Public Company Accounting Reform and Investor Protection Act in the Senate and as Corporate and Auditing
Accountability and Responsibility Act in the House.
 Effective in 2006, all publicly-traded companies are required to implement and report internal accounting controls to the SEC for
compliance.
 Enacted to:
 Ensure that all publicly traded companies had operational and effective internal controls
 Ensure that the companies’ financial statements contained an audit report from a certified external auditor.
 Hold company executives accountable for the information in the financial statement
 Titles
1. Public Company Accounting Oversight Board – the act created this board, which is responsible for setting the standards
and rules for audits, as well as monitoring and enforcing compliance with the law
 2. Auditor Independence – this section intends to ensure that auditors are truly independent, including a requirement that
firms providing the audit cannot provide any other services to the company they are auditing.
3. Corporate Responsibility
a. CEO and CFO must review all financial reports
b. Financial reports does not contain any misinterpretations
c. Information in the financial report is fairly presented
d. CEO and CFO are responsible for the internal accounting controls
e. CEO and CFO must report any deficiencies in internal accounting controls, or any fraud involving the
management of the audit committee
f. CEO and CFO must indicate any material changes in internal accounting control
4. Enhanced Financial Disclosures – this section added a lot of new mandatory financial disclosures that public companies
must comply with, including insider trading off balance sheet transactions.
5. Analyst Conflict of interest – this section was intended to boost investor confidence in securities analysts. Analysts must
disclose If they have any potential conflicts of interest
6. Commission Resources and Authority – this section is not particularly concerned about compliance; it gives the SEC
authority to remove people from positions such as brokers or dealers under certain circumstances.
7. Studies and Reports – requires the Comptroller General and SEC to perform various studies and report their findings.
Include the effects of consolidation of public accounting firms, the role of credit rating agencies in the operation of
securities markets, and securities violations and enforcement actions.
8. Corporate and Criminally Fraud Accountability – specifies that anyone with a role in defrauding shareholders of public
companies can be subject to fines and prison. Also makes it illegal to alter, conceal, or destroy records that could be
relevant in an investigation. It also provides certain protections for whistle-blowers
9. White Collar Crime Penalty Enhancement – focused in increasing penalties for white collar crime (manipulation,
destruction, or alteration of financial records)
10. Corporate tax returns – specifies that the company CEO must be the one to sign the corporate tax return and is therefore
responsible for any misstatements to the IRS
11. Corporate Fraud Accountability – this title includes definitions of behavior that would constitute fraud, along with
sentencing guideline and penalties.
 Non-compliance
Generally, the punishment for noncompliance depends on the section of the act that was violated. Non-compliance penalties
range from the loss of exchange listing, loss of director and officer insurance, to multi-million dollar fines and imprisonment. It can
also result to a lack of investor confidence. A CEO or CFO who submits a wrong certification is subject to a fine and imprisonment.

Audit is an independent examination of financial information of any entity, whether profit oriented or not, irrespective of its size or legal form
when such, an examination is conducted with a view to express an opinion thereon.

AUDIT OF SALES

Sales revenue – one of the sensitive areas that auditors need to place their great attention on since it is a high risk area in terms of nature and
amount.
Assertions: completeness, cut off, occurrence, right and obligation,

a. FLOW OF PROCESS OR SYSTEM

1. Sales process and road map
2. Sales tools and content assets
3. The quality of your existing leads – account possible low lead quality when looking at sales and percentages gaps.
4. Your reporting – looking at data and reports to measure success
5. Sales effectiveness – how the sales team work with each other
6. Customer service – customer retention
b. RISKS
1. Fictitious amount at the end of the year (by sales team or manager)
2. Bad debts
3. Fraud over cash collections
c. AUDIT OBJECTIVES
Help companies consider their current state so they can make better sales and business strategies. Includes sales and marketing
teams.
d. TEST OF CONTROL/AUDIT PROCEDURES
1. Review the occurrence of the sale
2. Perform sales revenue analysis
3. Review the sales price authorization
4. Review the collectability
5. Review the sales recognition
6. Review the completeness of revenue recording in the FS
e. REINGINEERED PROCESS
 Radical design of business processes to achieve dramatic improvements in productivity, cycle times, quality, and employee and
customer satisfaction.
 Batch programs
 POS/OMS applications

AUDIT OF INVENTORIES

Inventories are assets that are:

 Held for sale in the ordinary course of business (finished goods)
 In the process of production for such sale (work in process)
 In the form of materials or supplies to be consumed in the production process or rendering of services (raw materials)

a. ASSERTIONS
 Valuation and allocation – inventories are carried at LCNRV
i. Inventory count observation and test counts
ii. Valuation in accordance with accounting policies
iii. LCNRV
iv. Review for pledged inventory and for any purchase commitment
 Existence or occurrence – all inventories on the statement of financial position are held by entity or by others for the entity to
purchase (cost of sales) have really occurred and pertain to the entity
i. Inventory count observation and test counts
ii. Confirmation of inventories held by others
iii. Year-end inventory cut-off
iv. Perform analytical procedures
 Rights and obligations – the entity owns or has legal right to, all the inventories reported on the statement of financial position.
i. Inventory count observation and test counts
ii. Confirmation of inventories held by others
 Completeness – all inventories owned by the entity at the reporting date are included on the statement of financial position
and all cost of sales is included in the statement of comprehensive income.
i. Inventory count observation and test counts
ii. Confirmation of inventories held by others
iii. Reconciliation of inventory summary sheet with general ledger
iv. Year-end inventory cut-off
v. Perform analytical procedures
 Cut-off – purchases have been recorded in the proper accounting record
 Presentation and disclosure – inventories are properly classified, described, and disclosed in the financial statements, including
notes, in accordance with the applicable PFRS.
i. Valuation in accordance with accounting policies
ii. Review for pledged inventory and for any purchase commitment.

b. ORGANIZATION FOR CONTROL

 Purchasing department – responsible for placing order for materials with reliable suppliers
 Receiving department – charged with inspection and verification
 Storeroom (stockroom) – responsible for protecting materials
 Accounting department – records all transactions
 Cash department – pays all invoices after approval by the accounting department

c. RISKS
 Represent a very substantial portion of current assets
 Numerous valuation are used for inventories
 Valuation of inventories directly affects cost of goods sold
 Determination of inventory quality, condition, and value is inherently complex

d. CONTROL ACTIVITIES
 Approval and control of documents – issuance of inventories must be properly authorized. Review of damaged, obsolete, and
slow moving inventory should be carried out. Any write-offs should be authorized.
 Arithmetical accuracy
o All inventories and issues should be recorded on inventory cards, cross-referenced on appropriate requisition
document.
o The costing department should allocate direct overhead costs to the value of work-in-progress according to the stage
of completion (standard costing)
 Control accounts
o Total inventory records may be maintained and integrated with the main accounting system, if so they should be
reconciled to detailed inventory records and discrepancies investigated.
  Comparison of assets to records
o Inventory levels should be periodically checked against the records by a person independent of the stores personnel,
and material differences investigated.
o Where perpetual inventory records are not kept adequately a full inventory count should be held at least once a year.
o Maximum and minimum inventory levels should be determined and regularly reviewed for adequacy.
o Re-order quantities should be pre-determined and regularly reviewed for adequacy.
 Access to assets and records
o Separate centers should be identified at which goods are held.
o Deliveries of goods from suppliers should be recorded and checked as received.
o Inventories should be held in their locations so that they are safe from damage or theft.
o All inventory lines should be identified and held together (size, grade, origin, and title)
o Access to the stores should be restricted.
AUDIT OF PAYROLL
 An analysis of a company payroll processes to ensure accuracy
 Helps to that everyone’s pay is correct and that all deductions and reporting are accurate
 Payroll audits are internal
 Can take a few minutes to a few weeks, depending on the size and extend of the audit
 Payroll department is responsible for running the payroll audits, but HR needs to be involved.

a. PROCESS OF PAYROLL AUDIT

 Look at the employees listed on your payroll
 Analyze your number
 Verify time is correctly labeled
 Reconcile your payroll records
 Confirm tax withholding and remittances are accurate

b. COMMON PAYROLL ISSUES

 Classifying workers inaccurately
 Improperly classifying exempt worker
 Miscalculating overtime wages
 Paying incorrect tax rates
 Running payroll late
 Ghost employees
 Hour padding
 Buddy punching
 Lack of security

c. AUDIT OBJECTIVES
 Have accurate tax reporting and deposits in place
 Ensure compliance with employment laws and other regulations
 Providing accurate data to workers
 Uncovering potentials errors and inaccuracies

d. ASSERTIONS
Assertions Control activity
1. Segregation of duties
2. Time tracking system to record time
3. Timesheets approved by supervisors
Occurrence 4. Personnel files
5. Changes in employment status,
wages or salaries, and benefits.
6. Valid employee numbers
1. Prenumbered timesheets
2. Verification of submitted timesheet
Completeness
for the period by all employees in the
master payroll file.
1. Verification of payroll amounts and
benefit calculations
Accuracy
2. Use of payroll budgets with review
by department supervisors
Test of control
1. Observation and evaluation of
proper segregation of duties and time-
tracking system
2. Inspection of timesheets
3. Review and test of personnel files,
procedures for changing employee
records, and the entering and
removing of employee numbers from
payroll master
1. Check the numerical sequence of
timesheets
2. Review and test verification
procedure.
1. Review and test of entity’s
verification procedures.
2. Review entity’s budgeting
procedures.

Presentation
Authorization
Classification
e. EXAMPLE OF REINGENEERED PROCESSES
 Use of biometrics for timekeeping
 Payroll software implementation
 Provided training and education
3. Verified changes to master payroll
file through before and after reports,
reconciled to general ledger.
1. Use of chart of account.
2. Proper codes for different types of
employee functions.
3. Disclosure checklist.
1. Authorization procedures
1. Use of chart of account
3. Test of reconciliation of before and
after reports to master payroll file, and
master file to general ledger.
1. Review payroll reports, general
ledger, and chart of accounts for
proper aggregation or disaggregation.
2. Examination of timesheets for
proper codes.
3. Review the disclosure checklist and
related disclosures for relevance and
completeness.
1. Review and test authorization
procedures for each point of
authorization in the payroll cycle.
1. Review chart of accounts, payroll
reports, and general ledger for proper
classification.