Money leaves the company when a supplier charges more than you agreed. Payroll & HR finds it. Every pay run checked against your employee records and pay rates, so the people you pay are the people you employ, at the rate you agreed.
What Payroll & HR checks
- Paid after termination. No one is paid for a period after their leaving date, beyond the final pay your policy allows.
- One person, one account. No two employees share a bank account, an address and a tax id together.
- Pay rate against the record. The rate on each pay run equals the rate on the employee's record for that period.
- Rate change approved. A change to a pay rate has a recorded approver who is not the employee.
- Hours within pattern. Overtime, or hours outside an employee's normal pattern, is flagged with the amount, unless you have said to expect it.
- Headcount ties. The number of people paid equals the number on your employee list for that period.
- Payroll ties to the ledger. The pay run total equals the payroll entries in your books and the payment out of your bank.
- New starter has a record. Every first payment goes to someone with a complete employee record created before the pay run.
A Payroll & HR finding, in its own words
Employee E-042 was paid $3,120.00 on 31 August. The employee record shows a termination date of 15 July and a final pay on 31 July. That is one pay period after termination: $3,120.00.
Employee E-017's rate changed from $28.00 to $34.00 an hour on 1 June. I cannot find an approver. Tell me who approved it and I will record it and re-test.
What Payroll & HR may ask you
- After someone leaves, how many more pay runs can they appear in? For example 1 for a final pay. Unless you say otherwise: 1.
- Who can approve a pay-rate change? Unless you say otherwise: the approvers in approval_limits.
- Any times of year when overtime is normal? For example 'November and December'.
- Are any contractors paid through payroll rather than by invoice? Name them.
- Do any two employees share a bank account on purpose, like a couple? Name them.
What Payroll & HR draws on
- The people paid are the people employed. COSO Control Activities, principle 10; SOX: Payroll existence and validity.
- Pay rates match the record and changes are approved. COSO Control Activities, principle 10; SOX: Payroll master data and rate change controls.
- Authorisation of transactions and changes. COSO Control Activities, principle 10; SOX: Authorisation of transactions.
- Hours paid fit the pattern, and overtime is real. COSO Monitoring Activities, principle 16; SOX: Payroll hours validation.
- Payroll ties to the ledger and the bank. COSO Information and Communication, principle 13; SOX: Payroll reconciliation.
- The ledger agrees with its sub-ledgers. COSO Information and Communication, principle 13; SOX: Sub-ledger to general ledger reconciliation.
What Payroll & HR needs
- pay runs, as an export from your payroll provider or through a Connection
- your employee list, with start and leaving dates
- pay rates and their history, so a change can be checked for an approver
- Connections, optional: your payroll provider, and QuickBooks or Xero and your bank for the tie to the books. A pay-run export is enough to start.