ACA ICAEW Audit and Assurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

To effectively test employee costs, obtaining a breakdown of salaries by month serves as a robust approach. This method allows auditors to analyze salary expenses in detail, ensuring they align with the organization's payroll records and policies. A monthly breakdown provides insight into variances, trends, and anomalies over time, which can highlight areas requiring further examination.

When reviewing the breakdown, auditors can also compare the monthly figures against budget forecasts or prior periods to assess consistency and reasonableness. This granularity helps in identifying any unusual spikes or fluctuations in costs that may indicate potential misstatements or irregularities.

In contrast, while inspecting board minutes for discussions of provisions might provide some context about management decisions, it does not specifically verify the accuracy or completeness of employee costs. Tracing payments to invoices for post year-end, although valuable in verifying transactions, does not address the full scope of employee cost accounting, which encompasses gross salaries, benefits, and related liabilities. Reviewing related party transactions is essential in its own right, particularly for identifying conflicts of interest or oversight of compensation brought to related parties, but it does not directly test the accuracy of the employee cost calculation in the way a monthly salary breakdown does.