Final answer:
Auditors focus on various aspects of payroll transactions to ensure accuracy and compliance with legal requirements, particularly the correct calculation and withholding of payroll taxes.
Step-by-step explanation:
When examining payroll transactions, an auditor is primarily concerned with the possibility of overpayments and unauthorized payments, incorrect summaries of employee time records, under withholding of amounts required to be withheld, and the posting of gross payroll amounts to incorrect salary expense accounts. Auditors must ensure that payroll taxes are accurately calculated and withheld from employees' wages, and correct amounts are paid by employers. Key concerns include ensuring compliance with various legal requirements, preventing fraud, and maintaining the accuracy of financial statements. Efficient and accurate payroll tax compliance is critical, as it involves the advance payment of income tax, social security contributions, and various insurances.