Payroll and Financial Statements Control Risks for SoX testing

Payroll and Financial Statements Control Risks for SoX testing
Performing SOx testing for payroll process and how it impacts financial reporting, controls to address the following control risks need to be tested for design and operating effectiveness:

Control Risks

  1. Data required to calculate Corporate compensation is inaccurate and/or incomplete resulting in under/overstatement of compensation liabilities
  2. Compensation accruals is inaccurate and/or incomplete resulting in under/overstatement of liabilities
  3. Incomplete compensation data upload in G/L resulting in under or overstatement of compensation expense
  4. Incomplete compensation data upload in G/L resulting in under or overstatement of compensation expense
  5. Data required to calculate Corporate compensation is inaccurate and/or incomplete resulting in under/overstatement of compensation expenses.
  6. Payroll Personnel have access to the employee database and Human Resources personnel have access to the payroll system.
  7. Unauthorized modification/access to system
  8. Liabilities for employee and employer payroll taxes may not be recorded or may be recorded at incorrect amounts.
  9. Unauthorized access to financial reporting applications
  10. Information is not kept up to date, resulting in inaccurate financial statements
  11. Data transfers between system or modules fail or contains errors.
  12. Changes to the system information are not accurately updated
  13. Unauthorized changes to G/L Tress result in Financial Reporting errors
  14. Inaccurate or incomplete information posted to the G/L Tress resulting in Financial Reporting errors
  15. Errors and fluctuations in the information used to generate Financial Statements are not monitored for accuracy and completeness.
  16. Monthly Financial Statements and supporting notes are not reviewed for accuracy and completeness.

 

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