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Mark Company’s audit team isevaluating the controls that Mar

Mark Company’s audit team isevaluating the controls that Mark has implemented over the automatedprocessing of payroll transactions. During the understanding andassessment stages of the audit, the following processing and outputcontrols have been identified as being important in this processing:Todetect unauthorized access to payroll programs and processing, a systemlog is generated and reviewed on a weekly basis. This log identifiesthe programs that have been accessed during the past week, theindividual(s) who have accessed those programs, and the time(s) duringwhich the programs have been accessed. This log is reviewed, and anyunexpected or unauthorized access is investigated immediately.Controltotals are determined prior to the input of data and compared tocomputer-generated totals following transaction processing.Anygross pay calculations in excess of $25,000 per month are identified andwritten to a rejected transaction file for separate investigationbecause Mark’s highest paid employee whose salary is processed throughthe system earns $300,000 per year.The system generates areport of any errors or unusual situations identified during transactionprocessing. This report is reviewed, and any items are resolved in atimely manner, and the resolution is documented by notations made on thereport.Any changes to employee master file information sincethe last payroll period are evaluated to ensure that they have beenproperly authorized by the appropriate personnel.The output is reviewed for reasonableness prior to distribution to users.Required:Considerthe four methods of testing the operating effectiveness of controls(inquiry, observation, document examination, and re-performance). Foreach of the preceding controls, provide an example of how Mark’s auditteam might choose to test the operating effectiveness of the controlusing the four methods of test of controls (e.g., how would the auditteam use inquiry, observation, document examination, and re-performanceto test control #1, the generation and review of the system log?).[Note: Not all types of tests of controls will be appropriate fortesting all the controls.]Imagine that you will be presenting toyour audit partner on how you will conduct the audit of this section ofcontrols. Prepare the following deliverables:a PowerPointpresentation summarizing your testing methods for each of the controlslisted above and high-level advantages or limitations to such tests forthat particular control, anda Word document with your talking points to support the PowerPoint slides.Yourcombined documents should be at least 4 pages in length, but no morethan 6 pages in length, not including the title page and reference page.Outside academic resources not required, but they would likely assistwith your analysis. If they are used, citations must be provided.

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