EMPLOYEES' SAVINGS AND EMPLOYEES' STOCK BONUS PLANS AUDIT PROGRAM GUIDE AUDIT DATE LAST AUDIT DATE
AUDIT OBJECTIVES The primary audit objectives to test the key controls for the Employees' Savings and Employees' Stock Bonus Plans are as follows: A B C D E F G H I Only eligible employees are participants in the Plans. Participant contributions are made in accordance with a participant's request and are properly recorded to his/her account. Employer contributions are accurate and properly recorded to participants' accounts. Investments exist, are properly owned and reasonably valued. Purchases and sales are properly approved and accurately recorded. Dividend and interest income are accurately recorded. Distributions are requested in accordance with Plan documents and properly distributed. Forfeited amounts are properly allocated to participant accounts. Loans to participants are made in accordance with Plan provisions.
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A AUDIT REPORT SERIES a) Summary of findings and management response b) Audit Report 1 FDICIA DOCUMENTATION Prepare a FDICIA template noting the business objectives, the risks associated with achieving this objectives, the internal controls in place to mitigate those risks, and the related test work performed by Internal Audit to test those internal controls. 2 RISK ASSESSMENT CHECKLIST Complete the risk assessment checklist. Forward a copy to the department Head for review and agreement with risk ratings assigned. Make a copy for the Risk Assessment binder and keep original in the work papers.
B PRELIMINARY AUDIT PROCEDURES 1 Prior Year File Review Review the prior year work papers in order to plan for the current year audit and include the following copies: a) Prior year report and management responses b) Departmental procedures for applicable areas c) Organizational chart for the area under audit 2 External and Regulatory If applicable, review and discuss relevant external and /or regulatory issues. 3 Board of Director Minutes Obtain the Board of Directors minutes approved during the audit period. Read the minutes for approved transactions and verify transactions were completed as approved. 4 Miscellaneous a) Agenda for opening meeting b) Agenda for closing meeting c) Request list
C INTERNAL CONTROLS DOCUMENTATION Prepare a control memo documenting the significant operations related to the Benefit Plans including the eligibility / participation, contributions, investments, distributions including loans and forfeitures processes.
D FINANCIAL REVIEW Obtain the following month end reports from the Accounting Department: a) Balance Sheet b) Income Statement
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1 Reconciliations Obtain the reconciliations for all balance sheet accounts and perform the following: a) Trace and agree the general ledger totals per the reconciliation to the general ledger. b) Trace and agree the subsidiary ledger / control report totals to supporting documentation. b) Obtain supporting documentation for reconciling items in excess of $10,000 and/or 90 days old. Determine the propriety of each item and its disposition.
2 Analytical Review Analytically review all income and expense accounts from the last audit date to the current audit (or year end totals as appropriate, and document any unusual and/or significant fluctuations. Discuss these items with management as considered necessary.
E BOD REPORTS Obtain the quarterly Board of Directors Reports related to this audit area for the period under audit and perform the following: a) Trace and agree totals to supporting documentation including general ledger balances. b) Test transactions on a scope basis for accuracy and completeness.
F ELIGIBILITY REQUIREMENTS 1 Obtain the listing of employees hired during the audit period, the master payroll listing and the Account Balance Statement for each Plan as of the audit date and perform the following: 2 Select 10 employees hired during the audit period and verify that they are not included on the Account Balance Statements as a participant of the Plans. 3 Select 30 participants from the Account Balance Statement and perform the following for both Plans: a) Trace each participant to the master payroll listing to verify the participant is an active employee. b) Obtain the date of hire from the master payroll listing for each participant and verify the participant meets the elibility requirements of one year of service beginning on the date of employment and having completed at least 1,000 hours of service during the plan year.
G CONTRIBUTIONS 1 Obtain the detailed schedule of contributions made during the Plans' year classified by employer, participants, and other sources as of the audit date. Note both Plans are included on one detailed schedule. a) Agree the total contributions made by participants to the ADP Master Control and Account Balance Statement for the Employees' Savings Plan (ESP). b) Agree the total contributions made by the employer to the Account Balance Statements for both Plans.
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2 Select 20 participants from the Account Balance Statement and perform the following for the ESP: a) Obtain each participant's contribution election form. Agree the percent deferred per the election form to the detailed schedule of contributions. b) Agree the eligible salary per the detailed schedule of contributions to the master payroll listing Control. c) Recalculate each participant's contribution per the detailed schedule of contributions. d) Agree the recalculated amount for each participant to the total contributions made per the ADP Master Control and the Account Balance Statement, as applicable. e) On a test basis, agree the ending balance per the Account Balance Statement for the participant to the ending balance per the participant's Datair Statement. f) Recalculate the total employer contribution for each participant per the detailed schedule of contributions. g) Agree the recalculated amount per each participant to the total employer contribution made per the Account Balance Statement. h) From each participant's Investment Election Form, verify that the investment election is consistent with the investment model stated on the Account Balance Statement. 3 For the same 20 participants selected in #2 above, perform the following for the Stock Bonus Plan (SBP): a) Recalculate the adjusted compensation per the detailed schedule of contributions. b) Recalculate the total contribution for each participant per the detailed scheduled of contributions. c) Agree the recalculated amount for each participant to the Account Balance Statement. d) On a test basis, agree the ending balance per the Account Balance Statement for the participant to the ending balance per the participant's Datair Statement.
H INVESTMENTS 1 Obtain the Acquisition and Disposition Statement for the audit period and perform the following for Purchases: a) Select 10 security purchases. b) Agree the total shares purchased, cost basis and purchase date per the A&D Statement to the broker's advice. c) Verify the market value price per the broker's advice is within the high/low stock price range per Yahoo Finance. d) Sight supporting documentation for the approval of the purchase. 2 Obtain the Acquisition and Disposition Statement for the audit period and perform the following for Sales: a) Select 10 security sales. b) Agree the total shares sold, cost basis, date of sale and proceeds from disposition to the broker's advice. c) Verify the market value price per the broker's advice is within the high/low stock price range per Yahoo Finance. d) Recalcuate the gain / (loss) per the broker's advice. e) Sight supporting documentation for the approval of the sale. 3 Obtain the Asset Statement as of the audit date and perform the following: a) Select 10 securities for market value verification. b) Agree the market value to the stock's closing price on the audit date per Yahoo! Finance. c) Document any differences.
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4 Obtain the Transaction Statement for the audit period and perform the following: a) Select 10 dividends for investment income verification. b) Agree the dividend to dividend's declared per Yahoo! Finance. c) Recalculate the total dividend per the Transaction Statement. 5 Obtain the Transaction Statement for the audit period and perform the following: a) Select 5 interest income transactions for interest income recalculation. b) Recalcuate the interest income for each transaction based on purchase date, yield and shares held. c) Document any significant differences. 6 Obtain the Asset Statement and the safekeeping report as of the audit date and verify that the securities listed on the Asset Statement agree with those that Fifth Third is safekeeping for the Plan. Document and research any differences.
I DISTRIBUTIONS Select 20 participants terminated during the year from the Savings Plan Account Balance Statement and perform the following for each distribution made in 2002: a) Obtain the Payment Election Form and verify the form was signed by the employee and the "Pay to the Order of" per the form agreed to the check issued for the distribution. b) Agree the participant's asset balance per the Account Balance Statement to the amount of the Trust check. c) Sight the Account Balance Statement and verify a $0 ending balance is noted.
J FORFEITURES Obtain a listing of employees terminated during the audit period, select 5 employees that were participants in the SBP that were terminated within 3 years of employment and perform the following: a) Agree the participant to the Account Balance Statement verifying the total asset balance has been forfeited. b) Sight the Account Balance Statement and verify a $0 ending balance is noted.
K LOANS TO PARTICIPANTS Obtain the Transaction Statement: Distributions and Withdrawals for the ESP and perform the following: a) Select 10 loans issued during the audit period. b) Obtain the loan documents and verify the reasonableness of the interest rate and loan term, the loan balance is not greater than 50% of the vested balance, and the signature of the employee. c) Agree loan amount per the promissory note to the Transaction Statement. d) Sight a copy of the cashier's check noting payment amount agress with the promissory note. L SECURITY / FRAUD Based on the test work completed, verify that documents are properly secured and note whether any unusual and / or fraudulent transactions were noted. Such transactions should be discussed with the General Auditor.
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