Important Reasons for Conducting Payroll Audits

The payroll audit, sometimes called compliance audit, is the process of thoroughly reviewing a company’s payroll practices and processes. It detects compliance issues regarding employment laws. This function also validates tax withholdings, detects human errors, and mitigates payroll fraud. Auditing is a crucial process. This is one reason why many companies choose to outsource their payroll audit services to a reputable third-party service provider.

Payroll Problems

Internal audit is the first step to ensure that common payroll hitches do not become serious issues. Otherwise, this will require an external audit which is time-consuming and costly. Some of these problems are the following:

1. Erroneous working hours are clocked in.
2. Non-removal of dismissed employees.
3. Computation mistakes and manual data feeds.
4. Payroll dishonesty.
5. Obsolete employment laws and policies.
6. Stringent deadlines for inputs due to lengthy processing time.

The payroll audit will determine these issues. In like manner, it will help the HR department to traverse payroll along with HR processes. Plus, this is an effective method or reviewing accounts. Incidentally, an audit is compulsory for business loans and come in handy when necessary.

Why Conduct Audits?

1. Validate the accuracy of information and make corresponding updates. It enables the company to verify pay rates of employees compared to the figure specified on the ledger. This eliminated cases of overpayment or underpayment.
2. Compare payments versus inputs of employees. Workers are paid against actual hours worked. The payroll system (time cards) and paychecks are matched against vacation and sick-off time to check if they earn what they deserve.
3. A payroll audit ensures compliance. Although businesses want to maintain accurate records, mistakes will happen at a certain point. The process will show inaccuracies to allow for making corrections.
4. It is a way of analyzing and reconciling banking transactions. The procedure is primarily for accounting purposes. However, this can also be part of the auditing function.
5. The audit updates an employee’s status even if specific systems or practices have not been noticed or disregarded.
6. Discover manual mistakes which often happen once numbers are inputted into the company’s system. Auditors can review numbers as per salary rates, number of hours worked, total pay for the period covered, and taxes withheld. It will also confirm if the time on the database is properly marked.
7. Audits simplify documentation of business processes that can improve the company’s operations. It can help restrain abuses like corrupt acts and misuse of the organization’s funds and resources.
8. It will reduce the company’s budget. After an audit, the HR department to plan ahead and possibly implement the required adjustments and changes.

This is the most important point. Failure to properly audit payroll can result in severe outcomes on the business. Employing expert payroll audit services can be a better alternative than ordering internal; staff to perform these audits.

PCS Prostaff – Certified Solutions Provider

If you want the most efficient payroll audit services, do  not hesitate to contact PCS Prostaff.

We have been in the business of providing for different business organizations in California and adjacent states during the last 20 years. As a service provider, it ensures ease of payroll processing as well as systematic management of company payroll. 

You can always visit our company website to see our competencies and know the services that we offer. Or call us at  866-413-4103 during business hours to set an appointment with our HR and Payroll experts.