CARMAX has several branches island wide. The company imports and sells motor vehicle parts and accessories to retail customers. With the increase in staff complement, the company has decided to implement a computerised wages system. All employees are required to work eight hours daily. The employees' hours are recorded using the magnetic card which is attached to their identification card. When each employee arrives for work, they hold their card close to the card reader. This must be done, as encoded in the reader is the employee's TRN and NIS number, which is linked to the payroll system. The reader recognises the magnetic information on the card, identifying the employee as being 'at work'. When the employee leaves work at the end of the day, the employee must log out by ensuring their ID is swiped, as the process is reversed showing that the employee has left work. The information that is used to calculate the employees' weekly salary is obtained directly from the magnetic card information. Overtime is calculated as any excess over the standard hours worked. Any overtime over 15% of standard hours is sent on a computer-generated report by email to the Chief Accountant. If necessary, the Payroll Manger overrides overtime payments if the hours worked are incorrect. Statutory deductions and net pay are also computer calculated, with payments being lodged directly into the employee's bank account. The only other manual check, is the Chief Accountant authorising the funding of the salaries bank account form CARMAX main account, having reviewed the list of wages to be paid. REQUIRED (a) Discuss the benefits the Auditors can obtain by using information from the Computer- Assisted Audit Techniques in order to obtain sufficient appropriate audit evidence and to be able to draw reasonable conclusions on which to base the audit opinion (use examples from CARMAX)
CARMAX has several branches island wide. The company imports and sells motor vehicle parts and accessories to retail customers. With the increase in staff complement, the company has decided to implement a computerised wages system. All employees are required to work eight hours daily. The employees' hours are recorded using the magnetic card which is attached to their identification card. When each employee arrives for work, they hold their card close to the card reader. This must be done, as encoded in the reader is the employee's TRN and NIS number, which is linked to the payroll system. The reader recognises the magnetic information on the card, identifying the employee as being 'at work'. When the employee leaves work at the end of the day, the employee must log out by ensuring their ID is swiped, as the process is reversed showing that the employee has left work. The information that is used to calculate the employees' weekly salary is obtained directly from the magnetic card information. Overtime is calculated as any excess over the standard hours worked. Any overtime over 15% of standard hours is sent on a computer-generated report by email to the Chief Accountant. If necessary, the Payroll Manger overrides overtime payments if the hours worked are incorrect. Statutory deductions and net pay are also computer calculated, with payments being lodged directly into the employee's bank account. The only other manual check, is the Chief Accountant authorising the funding of the salaries bank account form CARMAX main account, having reviewed the list of wages to be paid. REQUIRED (a) Discuss the benefits the Auditors can obtain by using information from the Computer- Assisted Audit Techniques in order to obtain sufficient appropriate audit evidence and to be able to draw reasonable conclusions on which to base the audit opinion (use examples from CARMAX)
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:CARMAX has several branches island wide. The company imports and sells motor vehicle
parts and accessories to retail customers.
With the increase in staff complement, the company has decided to implement a
computerised wages system. All employees are required to work eight hours daily. The
employees' hours are recorded using the magnetic card which is attached to their
identification card. When each employee arrives for work, they hold their card close to the
card reader. This must be done, as encoded in the reader is the employee's TRN and NIS
number, which is linked to the payroll system. The reader recognises the magnetic
information on the card, identifying the employee as being 'at work'. When the employee
leaves work at the end of the day, the emplovee must log out by ensuring their ID is swiped,
as the process is reversed showing that the employee has left work.
The information that is used to calculate the employees weekly salary is obtained directly
from the magnetic card information. Overtime is calculated as any excess over the standard
hours worked. Any overtime over 15% of standard hours is sent on a computer-generated
report by
email to the Chief Accountant. If necessary, the Payroll Manger overrides overtime
payments if the hours worked are incorrect.
Statutory deductions and net pay are also computer calculated, with payments being lodged
directly into the employee's bank account. The only other manual check, is the Chief
Accountant authorising the funding of the salaries bank account fom CARMAX main
account, having reviewed the list of wages to be paid.
REQUIRED
(a) Discuss the benefits the Auditors can obtain by using information from the Computer-
Assisted Audit Techniques in order to obtain sufficient appropriate audit evidence and to
be able to draw reasonable conclusions on which to base the audit opinion (use examples
from CARMAX)
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