Is Payroll still a back-office job that involves a spreadsheet and an EFT transaction?
Is Payroll a financial transaction or an output of Human Capital Management?
Those were the days when there was one individual that was solely responsible for the complete payroll function of a business. That individual had complete autonomy with all aspects of the payroll.
Due to payroll being a critical function within the business, infrastructure limitations and the confidentiality of the data, meant that the payroll function was allocated to just one employee within the organization and led to a large dependency on one individual. Where one employee has been granted full control of the entire payroll process, operational requirements would make it challenging for the employee to take leave/ time away from work, and could allow for insufficient levels of accountability and transparency to exist within the organization. The above mentioned can often lead to a big risk or liability for the organization when the responsible payroll individual does not exercise all of their payroll duties correctly with accuracy and efficiency. This would not be duplicated within a business therefor no backup and a huge dependency / liability to the business, not to mention the individuals inability to take time away from work due to operational requirements.
Human capital is one of the biggest assets to any business and one of the top 5 expenses. It is critically important for businesses to ensure that their staff are paid correctly and timeously. In 2016, Payroll fraud was the number 1 source of accounting fraud and it affects 27 % percent of all businesses and lasts on average 36 months according to the association of certified fraud examiners.
It was reported that payroll fraud cost South African business more than R100 Million a year. These statistics are actually under-rated as Payroll fraud is under-reported not reported by companies that are concerned about maintaining an excellent reputation.
In today’s age of technology, companies have the option of choosing to partner with a service provider that will implement a Human capital management system that will help mitigate the risks of Payroll fraud and errors. This process allows for segregation of duties, workflows and automated notification for when critical changes are applied.
There is technology that allows for multiple user access to a payroll system with specific permissions and a fully comprehensive reporting facility that will provide comprehensive information regarding the audit process.. This technology can remove the infrastructure and disaster recovery responsibilities from the individuals within the company and allow for this responsibility to lie with the solution provider.
It is best payroll practice that a company conducts a Payroll Audit at least once every quarter to verify financial statements and data integrity.
The Payroll audit will help maintain accuracy, compliance and identify any potential risks within an organisation
Here are touchpoints that should be addressed in a Human Capital System Audit :
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Verify Pay Rates to source data
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Verify individual persons
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Verify additional income received to source documents
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Check the status of independent contractors
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Reconcile Payroll financials to General ledger and actual financial transactions
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Review the SARS submission process regarding the full EMP201 and EMP501 processes
Payroll Fraud is in most cases only identified 10 months after it has occurred and if it is not actively monitored, Let LabourNet Payroll Solutions assist you with an Audit as a preventive step in your HCM (Human Capital Management) department.
For more information on the above topic, please contact the LabourNet Helpdesk at
0861 LABNET (0861 522638).
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Email us: support@www.labournet.com
