Payroll processing is a special expenditure system. Generally speaking, payroll checks could be processed through the regular accounts payable and cash disbursements system, but processing payroll checks in this manner would have some drawbacks as follows:
General expenditure procedures that apply to vendors do not apply to employees;
Writing checks to employees requires special controls; and General expenditure procedures are designed to handle a relatively smooth flow of transactions.
Since payroll systems do not run frequently, they are well suited to batch processing and sequential files.
Top Issues for Audit Committees in 2014
The demands on audit committees are expanding. At the same time, their primary responsibility to oversee management’s activities, including financial reporting and compliance, remains fundamental to corporate governance. It can be challenging for audit committees to focus on their traditional core duties while staying up to date on emerging issues such as cybersecurity, proposed regulatory changes, and international developments. Following are several issues audit committees may wish to focus on in 2014 and questions to consider, excerpted from Deloitte’s November-December 2013 Audit Committee Brief.
Proposed Auditor’s Reporting Model
The PCAOB recently proposed auditing standards on the auditor’s reporting model and the auditor’s responsibility for other information in annual SEC filings. These standards, proposed in August 2013, could significantly change the external auditor’s report and necessitate expanded audit procedures.
The significant proposed changes include: