It is ideal for every company to conduct payroll audits, whether in-house or third party, to ensure optimal performance of payroll processes. In particular, payroll audits significantly curtail both financial and regulatory risks. It allows your organisation to deal with problems proactively via continuous adjustments and corrections.
Truth be told, no system is flawless. There are many opportunities for mistakes, and there will be mistakes. Ultimately, if you are looking to scale your business, you should be ready to confront perplexing payroll problems.Nevertheless, payroll audits greatly reduce unintentional errors and fortify financial controls over your business. All in all, payroll audits should be a regular function of your payroll process.
How can payroll audits help organisations?
Payroll audits are able to pinpoint any loopholes and inconsistencies that can easily lead to costly errors and fraud cases. An oft-cited example would be errors in the management of independent contractors and vendor status. Mistakes concerning the status of contracts for the pay periods can be damaging to the company’s bottom line if left unchecked. For instance, your company may be paying for services that is not required or utilised at all.
Ensure regulatory compliance and accuracy
As a company that operates across Asia Pacific, we do especially understand the importance of maintaining regulatory compliance and accuracy. And not just for companies operating across international borders. Local businesses too have to uphold regulations to maintain financial health and reputation. There are a myriad of activities to check and double-check. For instance, ascertaining that employees have submitted the necessary documentation, that paychecks correctly account for overtime hours and leaves, or confirm proper pay rate and eligibility. In addition, payroll audits verify the calculation of social security tax and withholdings accurately.
Accounting and record-keeping
Payroll audits facilitate business process documentation that can greatly benefit the organisation. The company can exactly verify whether there is adequate separation of duties to maintain internal control. At every point of decision-making, access by authorised personnel have to be documented to improve compliance and curb corruption risks. Moreover, payroll audits allow organisations to review payroll ledger accounts and validate checks against transactions.
Reconcile banking activities
Banking activities are an integral component in internal audit processes. Payroll audits ensure that checkbook balances match bank statements. In addition, it meticulously identifies and correct any discrepancies and errors.
If your company is facing difficulties in internal payroll audit, you can consider outsourcing your payroll audit processes to a third-party. AYP specialises in payroll audits and please feel free to contact us at +65 6820 0300 for more information!