The correct answer is: D. Payment has been made to all the employees on first of the month.
The auditor’s responsibility is to express an opinion on the financial statements, not on the underlying transactions. Therefore, the auditor does not have to check whether payments have been made to all employees on the first of the month. However, the auditor may choose to do so as part of their procedures to obtain an understanding of the entity and its environment.
A. Calculation of the salary: The auditor should check the calculation of the salary to ensure that it is in accordance with the entity’s policies and procedures.
B. Whether the calculation was verified by department heads: The auditor should check whether the calculation of the salary was verified by department heads to ensure that it is accurate.
C. Whether dues like PF, PT, TDS have been deducted and deposited: The auditor should check whether dues like PF, PT, TDS have been deducted and deposited to ensure that the entity is in compliance with its legal obligations.