Lesson: Auditing the Payroll Cycle

In this lesson, the auditing process for the payroll cycle is discussed, particularly when it is outsourced to a service organization such as ADP. Nick Palazzolo covers various aspects of this audit, including understanding the client's payroll cycle functions, reviewing the service organization's contracts with the clients, examining the client's internal controls over payroll, and testing the service organization's processes such as accuracy and completeness of payroll data, tax filings, and payments. Furthermore, the lesson delves into segregation of duties, internal controls, and testing those controls within the payroll function. This information is essential for auditors in assessing the effectiveness and reliability of the payroll cycle when managed by an outsourced organization.