ACCA Audit and Assurance (F8) Practice Exam

What are the required procedures for auditing Directors' emoluments?

1. Ensure financial statements are audited

2. Check payroll records

3. Review company emails

4. Obtain director's approval signatures

The correct answer is: Check payroll records

Checking payroll records is a critical procedure in auditing Directors' emoluments because it provides reliable evidence of the amounts paid to directors during the accounting period. Payroll records contain detailed information on salaries, bonuses, and other benefits received by directors, allowing the auditor to confirm that the amounts stated in financial statements are accurate and compliant with applicable laws and regulations. This procedure also helps in verifying whether the emoluments are appropriate to the services rendered by the directors and that they align with the company's remuneration policy. By reviewing payroll records, auditors can also detect any discrepancies between what is recorded and what has been agreed upon in the directors' contracts or board meeting minutes. In addition to payroll records, other procedures like reviewing the financial statements and obtaining approval signatures can provide context but are not as direct or specific to confirming the accuracy of emoluments as the examination of payroll records.