Which audit technique is best for identifying payroll overpayments for the previous year?

Using generalized audit software is the best technique for identifying payroll overpayments from the previous year due to its analytical capabilities and data processing power. This type of software allows auditors to access, manipulate, and analyze large volumes of payroll data efficiently. It can run various queries and tests to spot anomalies, cross-reference data entries, and identify trends that may indicate overpayments, such as duplicate payments, incorrect pay rates, or unauthorized adjustments.

Generalized audit software enables the application of complex algorithms and analytical procedures beyond the capabilities of manual review, making it particularly effective for conducting thorough examinations of historical data. This method is well-suited to audit the entire payroll population, rather than relying on limited samples, providing a more comprehensive view of potential issues over the entire year.

In contrast, generating sample test data is a more limited approach that may miss issues present in the broader dataset. The integrated test facility method, while useful for ongoing testing in a live environment, is less effective for retrospective analysis aimed at identifying past overpayments. Similarly, embedded audit modules are tailored to continuous monitoring and may not provide the necessary historical insight needed for reviewing payroll overpayments from the previous year.