This sample audit report can be used by auditors to conduct an organization's payroll process audit.

Payroll process audits involve understanding the payroll policies and processes, analyzing and updating existing process documentation, documenting associated risks and controls, identifying gaps in controls where risks are not adequately mitigated, and conducting testing to identify control gaps that need to be mitigated.

The following recommendations were noted as a result of testing:

• Management should update payroll policies and procedures annually and make them easily accessible on the company intranet.
• A complete review of all employee files, new hires, existing employees and terminated employees should be performed by payroll personnel to verify that all necessary documents are included and maintained in the correct employee files.
• Management should review the retirement system detailed report for accuracy after the system has been updated with the withholding data and locked.
• Payroll department personnel should review employee vacation accruals periodically to verify accuracy of the biweekly vacation accrual amounts.