Labor Costs - Audit and Analysis

A Labor costs describe all costs incurred by an employer from the employment of labor. Labor costs are usually presented as costs for an hour worked.
 
The economic growth of a nation requires a pattern and economic processing of rules available for directional as well as integrated utilized for the improvement of the welfare of the community. Institutions the economy side by side to drive all economic potential so defenseless and managed in order to optimally.

Introduction of Labor Costs

The company, in running its business requires accounting imformasi. The accounting information needed to assess the reasonableness of the financial liability that is presented by the audit management labor costs to a party or external companies. To assess the reasonableness of the financial statements the company's management were presented. Internal auditors required as one of the conditions that need attention are the costs that occur inside, therefore required an audit against the labor costs.

The labor cost audit be mandatory in carrying out tasks in conjunction with corporate finance as managers will be accountable is necessary audit procedures as mentioned in Financial Accounting Standards that applies. .

Labor cost audit to assess the reasonableness of the financial accountability is needed so that management costs can be controlled and analysed so that labor costs that can be pressed in optimum through efficiency and increased productivity labor.

The purpose of the audit fees for the processing of the company's workforce is achieved efficient labor costs in it becomes a matter of determining the level of compensation is related to the problem (salaries and wages) for employees, meet productivity Labor, as well as the achievement of optimum production volume with satisfactory results. Audit control was introduced much-needed labor cost for the company.

Analysis of Audit for Labor Costs

Companies that need cash to finance the company's daily activities. Cash in the company needed to finance the company's operations the main cost in the company's everyday activities as well as to the effectiveness or efficiency of the labor cost in addressing operational costs in the activity which can tailored to customer orders over the cooperation with some relationship or an affinity company.
Assessment of cost control in the process of realization of the company done by comparing with the cost of the audit in the process must be accompanied by proof of registration.

Based on compare can be known the magnitude of the deviation or difference, then conducted analysis of the factors of the occurrence. From the results of analysis there are two possibilities that can be indicated i.e. difference in favorable (favorable variance) or adverse difference (in-favorable variance).

Analysis of auditing the company's costs in the production process will assist the management in the preparation of the budget in accordance with the needs of the labor costs. Hence the need to analyze as thoroughly as possible possible to determine the level of efficiency in the production process for the company, so as to provide an overview and information valuable to the wisdom that will be taken by management the company.

Audit of the implementation of labor costs in the production process can be carried out effectively and efficiently then needed a labor cost audit procedures to know the procedure for spending money in the company.

A. Notion Of Auditing

Accounting inspection (auditing) is the field of accounting which aims to prevent about the fairness and appropriateness of the financial statements of the company, would have been in accordance with the applicable financial standards. Thus auditing is a process for obtaining objective and systematic way in assessing the evidence relating to the requirements regarding strict economic measures or events in order to ensure a level conformity between the assertive statements with the specified criteria and communicate the results to the user with an interest in the event.

Talking about auditing or understanding auditing (inspection), then the economic experts or practitioners have elaborate with a pressure varying sentences but the goal is the same, namely to check the feasibility of the financial statements in the company against the use of finances. In connection with the above, the following will be quoted some understanding/definition of auditing being propounded by the experts.

An auditing are:

"a systematic process to obtain and evaluate evidence objectively regarding statements about the activities and events of the economy with the aim to set degree of alignment of the regulations by criteria have been established, as well as the submission of the results to the user concerned ".

Based on this definition, that a systematic evaluation of the activities of acquiring and events that must be accomplished in accordance with processes and procedures at the level of the adjustment of rules or criteria that are already determined in advance.

The notion of auditing is the process that is by someone who is competent and independent so that it can gather and evaluate evidence regarding structural information from a entity (unit) effort to consider and report on the level of conformity of the information that the measurable criteria have been set.

With the base there are indications that in the process taken by the person must be independent and must gather and evaluate evidence of structural information of the business to be considered at the level of which should correspond to the information should be measurable and the criteria that have been set previously.

The auditing is the inspection carried out by a third party on the basis of the note accountants including analysis, testing (test). Confirmation and proof an other. Examination (audit) is defined as a review and investigation conducted by the public accountant is fundamental on internal control with the accounting records of a corporation or any other economic units before he gave the statement the opinion of accountants over the appropriateness of financial statements.

The sense of auditing is the verification of accounting data to determine precision and reliable or trustworthy financial reports presented by management.

This understanding to provide verification on accounting data in determining the accuracy of the financial reports are reliable or trustworthy by the general public for the need of corporate financial information presented in the report Finance.

The sense of auditing is a process of accumulation and evaluating evidence that integrated evidence of that was done by people who are independent and competent concerning the information which can be calculated from one particular economic unity with the purpose to determine and report on the level of the relationship between the level of information that can be calculated from the criteria that has been set.

The definition of auditing is the examination of the above administrative data on an enterprise undertaken with a view to examining the accuracy of data and information Administration and assess the feasibility and correctness of financial statements of companies that's still set.

The auditing is the accounting function is one which includes the research activity of the truth of the data/information in accounting which started in the financial statements and the assessment and analysis of the held data and accounting information are presented.

For an accountant, has the function of the checks is the seat that is free to give a statement against the feasibility of financial reports based on a generally accepted accounting principles, since data and information from the financial statements of the company there are the interconnections of its own in improving the accountability of the company, if the accounting data was correct.

Thus, it can be said that accounting is one part of an audit that is very lighted by the company to provide financial information, where accounting include how the collection and processing of data/ financial information that is important for later in the convey it in the form of the financial statements of the company which needs to be responded to.

To take financial decisions, so in accounting functions i.e. process data into useful information, allowing inspection of the accountant (auditing) basically had a form of analysis that is solved and outlines the information the one in the overview of the financial statements to find bookkeeping that supports the presentation of the financial report information.

Talking about inspection (auditing) of accounting, because accounting has a very important role in an enterprise where data on financial listed on it the required data and information must be equipped according to your needs.
      

B The Types Of Auditing

Auditing in general are classified into three groups are as follows:

1. The Audit of the financial statements (financial statement audits).

Audit of the financial statements are audited by auditors independent of the financial report presented by the client to state an opinion regarding the fairness of the financial statements. In an audit of financial statements of this independent auditor assess the fairness of the financial statements on the basis of conformity with the General accepted accounting principles.

2. Compliance Audit (Compliance Audit)

Compliance audit audit objective was to determine whether the audited in accordance with certain conditions or regulations. Compliance audits are generally reported to the authorities making criteria.

3. Operational Auditing (operational audit)

Operational audit is review in popular consultations were operational activities or any part thereof, in conjunction with a specific purpose. The purpose of the operational audit is an audit:

• Evaluate performance
• Identify opportunities for improvement
• Repair or make recommendations for further action.

Type of auditing can be classified into five, namely:

1. Examination of finance (Financial Audit)
2. An Examination operational (Operational Audit)
3. Examination of the Adherence (Compliance Audit)
4. Inspection Activities (Performance Audit)
5. Special Examination (special audits or special review/investigation)

Financial examination is an independent review which is primarily intended for assessing the reasonableness of the overall financial reports that have been presented by the management.

Operational inspection is an inspection of the independent manner den, selective and systematic way the analysis of an organization organized and conducted, with the purpose to assist in the implementation of management tasks better by giving information on weaknesses found the following suggestion/recommendation fixes.

Examination of obedience is an examination that is conducted to determine whether the kontraktuil agreement or specific regulations have been adhered to as expected.

Inspection activities are the implementation of the work that is not associated with a control. Which includes an examination of management to have strength in efficient examination program activities as well as to assess the success of the achievement of the objectives.

A special examination is an examination that is conducted with the purpose and scope of which in accordance with the assignment.

While classified into two types of audit, namely:

1. The General audit

General audit is an examination conducted for the accuracy and correctness of data administration and then giving specific judgments about the company in question.

  2.  Special investigation

Special investigation is an examination conducted to achieve objectives such as the investigation into misappropriation of tax specifies the indebted, flowers and some other obligations are met,
Based on the description, then you would have drawn a conclusion that the type of auditing can be divided into two part of it that is composed of an internal and external examination examination, is the internal examination is an examination of the performed by internal audit in the company that serves to improve the process of presenting a true and exact information on the financial statements of the company. While the external examination is an examination conducted by a public accounting or examination was performed by people outside the company.

C. The Types Of Audit

The type of audit which is often imposed by the company that the person or persons who carry out a group audits can be grouped into 3 (three) types of classes, namely:

1. Independent Auditor

The independent auditor is a consultant that provides services to the general public, especially in the fields of auditing or financial reports that are created by clients.

2. The Auditor of the Government

The Government's auditor is the auditor of professionals who work in government agencies that duty audit the financial accountability presented by audit-audit organizations or Government financial accountability or quantity that's attributed to the Government.

3. the Internal Auditor

The type of internal auditor is an auditor who works within the company (State enterprises or private companies) whose duty is to determine whether the policies and procedures set by the top management has been followed, to determine whether or whether or not the care of terhadapat organization and that determines the reliability of the information generated by the various parts of an organization.

D. Testing In Audit (Audit Test)

In the audit, the auditor is doing a variety of testing (test) that generally can be divided into three groups are:

1. Analytical Testing (Analytical Test)

Analytical testing was performed by the auditor with the way the study comparison and relationship between the new data with other data. Analytical testing is intended to determine the auditor in understanding the business and in emerging fields of claim requiring more intensive audits.

2. Control Test (test of control)

Prosecution is a control audit that is designed to verify the effectiveness of internal control structures. Testing control primarily intended to obtain information about the frequency of the specified activity, an activity and returns the employees carry out the control activities.

3. The substantive Testing

Substantive testing is a procedure designed to find aulit possible errors the monoter directly affects the fairness of presentation of financial statements. Monetary error contained in the errors in the information presented, namely:

1. Determination of acceptable accounting principles.
2. Acceptable accounting principles are not applied.
3. The lack of consistency in the application of generally accepted accounting principles grateful public.
4. The boundary separating speed (cut off) the recording of the transaction.
5. Calculation (addition, subtraction, multiplication and Division.
6. The work material, compaction and categorization information.
7. Inclusion of disclosure (disclosure) certain items in the financial statements.
8. Understanding Audit Procedures

Audit procedures are detailed instructions for collecting a certain type of audit evidence should be obtained at a particular moment in the audit, the auditing procedure is included:

1. The inspection of audit namely is an examination in detail against the documents and physical condition.
2. Observations i.e. is the audit procedures used by the auditor to see or witness the execution of an activity.
3. Confirm that is a form of inquiry which determines and allows the auditor to obtain information directly and third parties.
4. the request for information, that is, the auditor performs a procedure by requesting information orally.
5. Search, in carrying out this audit procedures, the auditor performs a search of information since the beginning of the first recorded data in the document, in the continue with the tracking data processing in the accounting process.
6. The examination of supporting documents (vouching) is the auditing procedure includes
7. Inspection of the documents supporting a transaction or financial data to determine the reasonableness and truth.
8. Comparison between the document with a note of accounting.
9. Calculations (counting). Audit procedures include: physical calculations against intangible resources such as cash or inventory on hand and accountability all printed, numbered form.
10. Scanning i.e. assessment of documents, notes and lists to detect elements that seem unusual that requires further investigation.
11. Implementation of money (reforming) is the repetition of the activity carried out by the client.
12. Computer Assisted Auditing Techniques. When the client's accounting records held in electronic media, the auditor is using computer assisted auditing techniques above.

E. Understanding Of Labor Costs

In any industrial enterprise the workforce is one of the factors of production in a series of income-generating unity or expected profits of the company. Labor was all company employees who provide services in the production process in terms of completion of all activities charged to them. For it is necessary the presence of a retribution for the use of labor.

The labor is the physical or mental effort, expanded product manufacturing cost is the price paid for using human resources.

From this definition it can be concluded that the cost of work is all the retribution that was given by the company to all employees. Moreover, it can also be concluded as the price is paid for the use of human resources.
To carry out the employees can be classified in accordance with the functions where the employees work i.e. the function of production management functions, administrative functions and public and financial functions (when deemed necessary are separated). So labor costs incurred can be classified into production labor costs, labor costs of public administration and labor costs of marketing.
For control purposes and to clarify the accounting treatment, labor costs particularly in the production are classified as follows:

1. Direct labor costs (Direct Labor Cost)

Direct labor costs are the most effective way to produce goods that can be defined as the workforce that can be used to produce the goods. and services or followed in his footsteps on certain products produced companies. Understanding the cost of direct labor becomes more obvious with the left and found the direct labor costs as follows:

1. Great for labor costs of small type it is associated directly with the level of production.
2. Costs incurred for labor is connected or is a variable cost.
3. Generally be said that labor for its activities directly connected with the final product (particularly ma in the determination of product prices).

So that can be categorized as direct labor is the workers or working factories that participated in the activities of the process of production of raw materials to shape materials so.

2. Indirect labor costs 

Indirect labor costs is all the retribution 

granted to employees of the factory, but its benefits can not be defined to a particular product produced by the company. As for the nature of the indirect cost of work power as follows:

1. Large small labor of this type that are not associated directly with production activities.
2. Costs incurred for labor, this type is a fixed cost.
3. The place of work, of this type of workforce is not necessarily in the factory, but outside the factory.
4. Understanding and classification of Cost
5. Understanding Costs

To produce something whether it is goods or services, then it needs a calculated and known the magnitude of the cost or the need and the possibility of obtaining revenue which may be accepted. Every sacrifice costs always expected would bring bigger results than on who was sacrificed on the future.

Thus, an entrepreneur should be aware of how the magnitude of the sacrifice in the production process, so that the ingredients raw goods could become so with upholding the quality of production, basically every the production process which is a component of the cost of the changes. In this case, total costs can always be calculated and can be compared with the total enrollment may be obtained.
Speaking on the issue of costs is an issue that is quite extensive, therefore in them look two parties who are related to one another in the production process.

When we pay attention to the costs that must be exited right to a process of production, then it can be split into two properties, that is, which is the cost for producers was received for those who give the factors of production are concerned.

The case for the consumer, the cost for acquiring the tools required for the satisfaction which gives satisfying tool needs.

"Costs (cost) is the amount that is measured in units of money, i.e. a number of expenditure-expenditure in the form of constant or in the form of the transfer of wealth to earn something with capital expenditure process or stock, the services included or obligations incurred, in relation to the goods or services procured or to be procured during the coming ".

From this definition, then it can be said that the notion that raised costs is a thing that is still the notion widely because of all that belongs to the element of expenditure.

The cost is:

The costs are considered will provide benefits or service potential in the future and therefore constitutes the assets included in the balance sheet. Rather expense or expred cost is a cost that has been used to make accomplishment. Because the types of costs it can no longer provide benefits on upcoming, then their place is at the approximate profit loss

F. Classification of Costs 

The main companies in financial management in the production process would of course require a fee, due to the cost accounting aims to present cost information is needed so that they can manage the management company or its part in effective in taking down and subsume the costs must always be noticed for what purpose requires management of information costs.

The calcification costs there are certainly the concepts of costs associated with the entire so that goods that arrive at the market or in the market.

Therefore in cost accounting there are a variety of ways its costs as follows:

1. Classification of the costs on the basis of objects of expenditure.
2. Cost Classification on the basis of principal functions within the company.
3. Assignment costs over relationship costs with the goal of something that is financed.
4. Cost Classification on the basis of the relationship of costs by something that is financed.
5. Cost Classification on the basis of time.

G.   Understanding Internal Control 

In this discussion will be put forth the notion of internal control. The internal control or internal auditing is carried out by the action Manager to find out if the course work and the result is in accordance with the planning or No, so the functions of "planning to detect a mistake as it immediate accours".

What was the controllable work plans or implementation planning. In this case the control that is not something that has been done, but something that might be the case where to come. Thus, planning our return decisions that we desire, make sure the picture with the control we want to find out where are already up to the plan was implemented. How to follow up something of the decisions have been taken, then there is progress or not, when there is congestion to where it is and what congestion is, internal auditing means the ability to forward and provide motivation as well as to find out what has been done in comparison, with what should be done. With the supervision of the manufacture of standards containing for the measurement of Office work

Based on this, then the process of control consists of specific measures on the basis of all controlling. Regardless of the activity of some basic implementation in the process regarding the internal controls within the company itself.

Thus, The basics of management:

1. Standard or the basis for Determining control
2. Measurements for the work
3. Comparing job with standard, and determine if there is a difference.
4. Fix the lapses with the help of an action that is correct.

On the notion, expressed in slightly different habits, controlling, comprising in part, as follows:

1. Determine what needs to be done or can be expected.
2. To determine results with expectations which led to the achievement of business objectives.
3. Investigate what will be done.
4. Test results is in compliance or not, which then apply in the improvement measures will need to be added.

The use of process control for an illustration regarding the activities of the section of the budget, the news conveyed to sell to specialty retail shops. The actual order provides certainty to this with a later sell that run as job activity.

At the sale have ration sales respectively. This is a standard that can be compared to the actual volume of the role of the seller to ration the sale of each can give the size to work at passage. Feed back information about the deviation between the sales order indicating the basis for corrective action which can be viewed in order that sales orders procedure is used, the product demonstrated nicely shows the price and etc., or on the part of the sales examined again, or the sales procedure dirobah.
It shall be noted that the use of process control it is estimated that the work of the planning to be complete and clear. Must be at least a little bit of planning (planning) before the controlling Department.

Surveillance efforts can really help, whenever any member of an organization to find out the common objectives and which is sought and all relate to a common goal and closely from his work unit, section or the Department, which is where the goals are a reflection and an integral part of all the common goals of the organization. If a job, whether he was head of the Department or the supervisor, to know whether to expect himself regularly receive information either for he knew his relative in the expected limits.

H. The Purpose Of Internal Control

In general all the activities in the supervision is carried out to achieve the goal as planned earlier. So it is with the goal of running the internal control.Internal control objectives, as follows::

• Assist management in the implementation of the company's administration in an effective and efficient in carrying out the procedure to determine the wisdom of the work of the organization.
• Notify and if necessary correct the way it works to make it more effective and efficient.
• Determine the level of truth of the accounting data are made and the effectiveness of internal procedures.
• Determine to what extent protection, logging, and monitoring against the richness of the organization that may be able to cause the theft. 

To achieve this goal, then the internal control carried out on objects that allow the achievement of these goals, against:

• Amount of work, i.e. the number (quantity) of the results that have been is a process of implementation activities.
• Quality of the work, namely the review of the causality the results that have been achieved.
• Employees in this field then the goal is to know the seriousness, crafts and skills work.
• Money that is, where the object is very important and the target control is whether the use of that money is legitimate and has been implemented efficiently or not.
• Supply Goods, objects it concerns the purchase of the use and maintenance of the goods-whether inventory goods has done well in accordance with the provisions or not.
• Workspace, whether the workspace is already laid out and utilized carefully or not.
• Time, in terms of the targeted surveillance is whether time is used in any working time it for the benefit of the organization or not.
• Working methods, which was targeted by this object is whether the methods of work applied by the leadership of the Organization has been implemented by the operational authorities appropriately or not.

I. Elements Of Internal Control

The implementation of internal control is basically is a system rather than the overall supervision of the implementation, which is based on a formula-formula of internal control can be put forward that the elements of internal control, which implemented as follows:

• Plans of the Organization
• Method and the coordinate provisions to be
• Protect the property of the company.
• Personnel.
• Customs (practice).

With respect to the account, then good should be able to meet the things, as follows:

• Help facilitate the preparation of financial reports and other reports with economically.
• Includes accounts that may be needed to be able to describe well and observant property-property, debt, revenue, cost of goods and the costs should be itemized so useful to management in controlling the company's operations.
• Carefully and briefly Outlines what has to be loaded in each account.
• Make the control accounts where necessary.