Example of Revenue Swaps & Violation Of Cut Off Period 

Objective Of Depth Test On Weekly Wages

·         To confirm the operation of controls of wages and help to substantiate the wage charge in the profit and loss account.Audit Work/Procedure of Depth Test on Weekly Wages

1. Select a sample of employees from the payroll. The sample should include at least one employee from each department and should include some new employees taken on during the year. The sample should also cover the various payment methods eg flat-rate, time-work, piece-work
2. Check new employees against personnel records, checking proper authorization for employment
3. Verify gross pay against rates of pay in the personnel records and authorities for employment
4. Verify deductions such as PAYE and insurance to personnel records, tax tables,etc. Check that such deductions are credited to control accounts and have been paid by the company or are accrued at the end of the year
5. Check that the payroll has been signed by a responsible official as authority for payment
6. Examine evidence of cheques drawn for wages
7. Examine any evidence of receipt by the employee such as a signature record
8. Follow through personnel records of those who have left employment to the wages records
9. Follow the payroll details through any wages control account to the financial statements.

• Sometimes also known as “cradle-to-grave” tests

• Its involves taking a transaction or a number of transactions and following them through the accounting system from start to finish or vice versa

Purposes/Objectives

• Generally, depth test is to provide audit evidence to assist the auditor in arriving at his opinion
• There are also some specific purposes of using depth test:
• To confirm the accuracy of his client’s accounting system. Also refer to as “walk-through checks” Such a depth test is likely to involve only a small number of transactions

• To perform compliance test. The auditor may use a number of transactions, testing the control in depth at each stage. Such tests will provide him with evidence as to whether or not he may rely upon that control in planning later audit work

•  To provide evidence of a substantive nature. He may use such principles to check that transactions have been properly recorded in the accounting records or in the financial statements.

3.0  Scrutinize the analysis and identify those debts which appear doubtful;

4.0  Discuss with management their reasons, if any of these debts are not included in the provision for bad debts;

5.0  Perform further testing where any disputes exists;

6.0  Reach a final conclusion regarding the adequacy of the bad debts provision

• the goods have been despatched;
• the goods are not included in stock

2.0  All good dispatched prior to the year end have been invoiced and included in debtors;

3.0   No goods dispatched after the year end have been invoiced and included in debtors