What is one audit procedure that may be used to test for proper handling of terminated employees?

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What is one audit procedure that may be used to test for proper handling of terminated employees?

Answer:

A procedure that tests for proper handling of terminated employees is to select several files from the personnel records for employees who were terminated in the current year to determine whether each received termination pay consistent with company policy. Continuing payments to terminated employees can be tested by examining payroll records in the subsequent period to verify that the employee is no longer being paid. Naturally, this procedure is not effective if the personnel department is not informed of terminations.

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