The easiest way to think about a payroll audit is as the inspection of payroll records. If you have ever conducted an internal audit at your company you know it can be tedious and time consuming. Even if it is not your favorite part of the job, experts agree it is important and recommend conducting a payroll audit quarterly (at minimum) to make sure records are accurate and up to date. Get it wrong and you could be over or underpaying staff and run the risk of inaccurate financial reporting. If you are not convinced of the audit’s importance, here are some benefits to consider.
Why conduct a payroll audit:
- Catch incidents of payroll fraud (whether intentional or by mistake)
- Verify active employees pay rates are correct
- Confirm HR and payroll records are up to date
- Make sure your people are being paid correctly for the time they have worked
- Ensures your business is compliant with tax laws and you are prepared in case of a payroll audit by the Government in Canada. According to the Association of Corporate Council, in 2013 the CRA targeted auditing primarily based on risk assessment. Check out their Top ten CRA audit flags article for findings.
Engaging in a year-round audit and compliance strategy is the best way to make sure payroll auditing results don’t catch you off-guard. Depending on your company size and processes, your audit could be a paper-based, manual process (checking employees work status against hours worked and pay). In a future blog post, we will cover tips for conducting one of these audits internally. Consider using a third party if you are looking for a professional job. Relying on a certified payroll professional can save you time, which you can dedicate to other tasks.
Learn how Ceridian’s flexible payroll processing software and services provide easy management of payroll data, HR reporting and analytics, and employment & salary verification. Read Ceridian’s article Small Business, Consider Compliance to learn more.