MEMORANDUM
To: Dr. Mohrweis
From: Hanqi Shao
Date: October 30, 2014
Subject: Cases Study
The Trolley Dodgers
Question #1
First key audit objective for a client’s payroll function is completeness. Due to the huge
amounts involved in the payroll, the test of control is the need to verify that all of the
amounts paid out to employees are recorded. The substantive audit procedures could be
comparing the book and the payroll bank statement.1
Second key audit objective for the payroll function is to make sure the existence of the
actual payments and the payments is paid to genuine employees in the company. The test
of control could be checking the time card and personnel files. The substantive audit
procedures could be checking whether the payment to employee is correct amount and
they are shown on the general ledger.2
Third key audit objective for payroll function is timing. The test of control is that auditors
should examine procedure manually and observe when the recording happens. The
