EVALUATING THE TARGET COMPANY'S PERSONNEL

INTERNAL AUDIT WORK PROGRAM

AUDIT PROCEDURE INITIALS DATE W/P

NOTE: This questionnaire covers most points necessary for an

evaluation of personnel and personnel policies. It may be
necessary, however, to add additional questions for specific
company situations, such as overseas operations, if they are
significant. Each question should be answered in sufficient detail
to clarify any queries regarding personnel.

o Do you know the number of employees by sex and age,

grouped into production, sales, purchasing, engineering,
and administration, and the approximate total wage or
salary cost of each category?
o Have you examined all union affiliations and contracts
for significant agreements?

o Have you determined average pay scale and fringe

benefits for production employees?
o Have you reviewed strike history for the past five years
(e.g., dates, duration, issues, settlement terms)?

o Are there any formal charges pending before federal or

state labor agencies? If so, how have similar cases been
resolved in the past?

o Do you know what labor unions are represented in the

industry and the general area? Is there any special
organizing effort going on in the area?

o Have you looked into the incentive system, average rates

(incentive and hourly), dates they were established, and
the date of the latest updating of standards?

o Have you reviewed the following?

o Labor morale and the handling of labor relations

o Working conditions, statistics on turnover, and

the reasons for it

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 EVALUATING THE TARGET COMPANY'S PERSONNEL
INTERNAL AUDIT WORK PROGRAM

AUDIT PROCEDURE INITIALS DATE W/P

o Employment, recruiting, and personnel policies

and procedures

o Accident frequency and safety inspection reports

o Medical problems and sick leave frequency

o The wage and salary administration system

o Effectiveness and costs of training programs and

apprenticeship systems
o The productivity of the labor force

o Any unfilled positions

o The cost and effectiveness of the personnel

department

o Have you looked into the general labor market, including

the following?
o The types of skills available in the area

o Current pay rates and personnel practices of the

industry and of other companies operating in the
immediate area
o Area transportation, community recreation
facilities, housing, and schools

o The overall labor situation

o What union demands were made in the last

bargaining process and what demands will likely
be made in the next

o Do you have the following information on management

personnel?
o The organization of management functions and

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 EVALUATING THE TARGET COMPANY'S PERSONNEL
INTERNAL AUDIT WORK PROGRAM

AUDIT PROCEDURE INITIALS DATE W/P

responsibilities

o Management and key employees, including

position, career path, age, compensation,
retention outlook, and management training
received
o Any employment agreements or unwritten
understandings

o Any replacement candidates for present

management
o Recent key personnel losses to competitors

o The character and attitude of key personnel

o In evaluating employee benefit programs, have you

reviewed the following?

o The details and costs of pension, profit-sharing,

life insurance, disability insurance, medical
benefits, travel, accident, bonus, deferred
compensation and severance plans
o The funding status of plans and the performance
of fund managers

o Benefits and salary levels compared to those of

the acquirer (Determine if either company would
need to upgrade its benefit programs or salaries as
a result of the acquisition. If so, estimate the
cost.)

o Vacation and sick pay policies

o The number of company-provided cars

o Any stock option or stock bonus plans and the

number of outstanding options. (How would the
plans integrate with yours or otherwise be treated,

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 EVALUATING THE TARGET COMPANY'S PERSONNEL
INTERNAL AUDIT WORK PROGRAM

AUDIT PROCEDURE INITIALS DATE W/P

and what would the resulting costs be?)

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 EVALUATING THE TARGET COMPANY'S PERSONNEL
INTERNAL AUDIT WORK PROGRAM

AUDIT PROCEDURE INITIALS DATE W/P

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