Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.

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Discuss three important differences between the payroll and personnel cycle and other cycles in a typical audit.


Answer:

Three important differences between the payroll and personnel cycle and other cycles in a typical audit are:
• There is only one class of transactions for payroll, whereas most cycles include at least two classes of transactions.
• In the payroll cycle, transactions are far more significant than related balance sheet accounts.
• Internal controls over payroll are effective for almost all companies, even small ones. This is primarily due to severe federal and state penalties for errors in withholding and paying payroll taxes and employee morale problems if employees are not paid or are underpaid.

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