3 steps for conducting an internal payroll audit
It is a company’s responsibility to perform certain practices under local, state and federal regulations. Payroll is one of the most crucial of those operations. Employees expect to be paid accurately, fairly and on time, so businesses should make it a priority to fulfill this promise. Since government requirements are always subject to change, organizations need to remain current with their mandatory obligations. If payroll teams feel as though they’ve been struggling to succeed in completing their tasks, it may be time to reevaluate. An internal audit may be a strong move for companies looking to get their payroll back on the right track. Let’s take a look at three steps to conduct successful reviews:
1. Confirm pay rates
There are various levels of pay in each business’s ledger. Whether it’s salaried or hourly employees, organizations need to make sure their workers are compensated correctly. Errors in this field often occur after pay raises or when minimum wage is altered. To avoid paying people above or below the normal or standard rate, payroll teams should verify these figures during their internal audit, according to The Houston Chronicle. Any mistakes found can then be rectified, restoring people’s pay to the appropriate amount and saving companies from experiencing future headaches.
“Payroll teams must ensure terminated employees are removed from their system.”
2. Maintain active employee roster
It’s common for payroll teams to forget to remove terminated employees from their worker list. However, this practice can pose major problems, as it could result in continued compensation for former employees. In the process of their payroll review, company leaders should double-check their roster to ensure there aren’t any blunders present. Furthermore, HR teams should analyze their own procedures for the removal of a worker. There needs to be a system in place for not only notifying the payroll department of this change, but making sure the adjustment is made in a timely manner.
3. Ensure current standards are met
There are a lot of moving parts for organizations to remember regarding their payroll. However, failure to follow present government standards could land companies in hot water and leave them to deal with expensive penalties. It’s important for payroll teams to confirm wage and hour laws are met – especially in terms of employees who may or may not be exempt from overtime. In addition, businesses should analyze their benefits policies to maintain compliance with the Affordable Care Act’s standards, while also confirming mandatory and fringe perks are deducted correctly, according to AZ Central.
Organizations and their payroll teams must take the necessary steps to make sure their processes and policies serve their purpose. Although company leaders may have many tasks on their plates, payroll should be a major priority. Establishing an efficient procedure and completing regular audits to ensure it’s running smoothly will help businesses maintain compliance and avoid penalties, while improving overall employee satisfaction.