In this chapter, the learning objectives are: Develop an understanding of the human resource management process, be familiar with the types of transactions in the human resource management process and the financial statement accounts affected,. | Auditing the Human Resource Management Process Chapter Twelve Overview of the Human Resource Management Process The human resource process starts with the establishment of sound policies for hiring, training, evaluating, counseling, promoting, compensating and taking remedial actions for employees. The main concern of the auditor involves payroll transactions once an employee has been hired. Flowchart for EarthWear Clothiers Human Resource Departments By date Operating Payroll Initiates personnel changes Payroll master file changes Reviews master file change report Review Payroll master file changes Time sheets Approved by supervisor Time sheets Input Error corrections From IT To IT Flowchart for EarthWear Clothiers Departments Payroll IT Payroll master file Error report Payroll processing Payroll cheques Payroll register Error corrections Payroll register Review by date Payroll master file changes report Payroll reporting General ledger Periodic payroll reports Tax reports and forms Two types of transactions are typically processed through the human resource management process: Payments to employees for services rendered. Accrual and payment of payroll-related liabilities arising from employees’ services, including liabilities for payroll taxes and pensions. Types of Transactions and Financial Statement Accounts Affected Financial Statement Accounts Affected Types of Documents and Records The Major Functions Segregation of Duties Inherent Risk Assessment In assessing inherent risk the auditor may want to consider the effect of economic conditions on payroll costs, the supply of skilled workers and the frequency of employee turnover. The auditor should be familiar with any existing labour contracts and the impact of regulation on the company. The inherent risk associated with non-officers of the company is generally considered low. The inherent risk associated with officers of the company may not be considered low because of the ability to take advantage . | Auditing the Human Resource Management Process Chapter Twelve Overview of the Human Resource Management Process The human resource process starts with the establishment of sound policies for hiring, training, evaluating, counseling, promoting, compensating and taking remedial actions for employees. The main concern of the auditor involves payroll transactions once an employee has been hired. Flowchart for EarthWear Clothiers Human Resource Departments By date Operating Payroll Initiates personnel changes Payroll master file changes Reviews master file change report Review Payroll master file changes Time sheets Approved by supervisor Time sheets Input Error corrections From IT To IT Flowchart for EarthWear Clothiers Departments Payroll IT Payroll master file Error report Payroll processing Payroll cheques Payroll register Error corrections Payroll register Review by date Payroll master file changes report Payroll reporting General ledger Periodic payroll reports Tax reports and .
