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    Auditing Payroll Cycle - Common Errors and Frauds

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    What are the common errors and frauds in the personnel and payroll cycle?
    Which control characteristic are auditors looking for to prevent or detect these errors and frauds? What features of the payroll system could be expected to prevent or detect payment of a fictitious employee? What about the omission of payment to an employee?

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    The common errors and frauds in the personnel and payroll cycle are (1) recorded employee transactions are not valid (creating fictitious employees on the payroll and converting the pay checks issued to such employees), (2) recorded attendance transactions are not valid (fictitious hours), and (3) incorrect cost accounting classification for labor (unauthorized payments; incorrect salary payments - falsified sales or hours, ...