Payroll audit tests

The payroll management process, despite being a support to the administrative area of the company, can become a vulnerable point in organizations when different situations are not addressed, among these is:

For all these reasons it is necessary that, through an internal control audit, a review of the aspects that can mitigate the different risks and that it is possible to identify opportunities for improvement within organizations. Below we mention the regulations and steps to be taken into account by the person in charge of performing an internal control audit in a company. If you want to go deeper into this topic, know what are the payroll and human resources indicators in companies.

To perform an internal control audit, it is important to take into account the following rules related to the settlement and management of payroll within a company.

The procedures mentioned below are the main ones to be taken into account by those in charge of internal control, related to the settlement and management of payroll in companies.

What is the purpose of a payroll audit?

Determine whether the processes and procedures of the payroll area are formally identified and updated. 2. Verify the existing controls in the payroll process by means of a process flow survey.

What is a payroll audit?

The Preventive Audit of Payroll and Social Security is an internal control process that is performed in parallel to the process of settlement and payment of payroll, identification, control and mitigation of risks in the processes of personnel administration, salary and non-wage payments, payment of salaries and benefits, and …

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How would the evaluation of social benefits be determined?

The evaluation will be carried out taking into account the payroll and the activities established in the social benefits that the current regulations contemplate so far during the current fiscal year, the audit will be carried out on the functionality and existence of controls; the effectiveness and operability of the …

Payroll audit pdf

In this editorial we mention what regulations must be taken into account to perform an internal control audit process, and some aspects that the management and the person in charge of executing the audit must take into account, so that it can add value to the organization.

“It is required that, through the internal control audit, situations that mitigate the risk and allow identifying aspects of improvement for the entities are reviewed “Tweet ThisPayroll management, despite being an administrative support process in the organization, is a vulnerable point of the entities when situations such as unauthorized payments, inefficient settlement of payments to employees, unjustified differences between accounting and tax returns, diversion of money, and other situations that may jeopardize the ongoing business are not addressed. For this reason, internal control audits are required to review situations that mitigate risk and identify areas of improvement for the entities.

What can be some controls in the payroll process?

Errors that can be made in the process of preparing and paying payrolls can be the following: Payment of salaries to personnel that do not exist. Payments for work that was not performed. Absence of verification of calculations by a person other than the person who prepares the payroll.

What are the most risky points in payroll management?

Alteration of accounting information. Incorrect interpretation of the income statement due to non-existent accounting facts. Inadequate flow of information for accounting. Forgetfulness or mistake in typing the code assigned by the bank for payments by transfer of payments for payroll and suppliers.

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What are the audit procedures?

AUDIT PROCEDURE Audit procedures are: the set of investigation techniques applicable to an item or a group of facts or circumstances related to the financial statements.

Wages and salaries audit

Eliana Rodriguez, national director of payroll outsourcing and latam practice leader at Adecco Colombia, said that although payroll is sometimes considered a tedious task, it is not simply a matter of paying a certain amount within a set period of time, but must take into account current regulations and ensure the welfare of the organization’s employees.

Another key aspect is the confidentiality and proper management of the information collected for the payroll process. Companies must keep an organized history of each worker to avoid inconveniences with payments.

It is also important for companies to be aware of the reporting deadlines defined by the organizations with which they manage employee social security procedures, in order to comply with them.

A fourth element is that companies must be permanently audited to ensure that they comply with the correct payment of social security. Likewise, an internal audit process must be maintained to mitigate the risks of non-compliance.

What are the elements that are present in the payroll?

The structure of the payroll consists of: company identification data, employee data, settlement period, payments, deductions, contribution bases, liquid to be received and place of issue, signature and stamp of the company and the employee.

What is inventory auditing?

The inventory audit is a set of procedures whose purpose is to verify the correct recording, flow and valuation of inventories, as well as the correct application of inventory management methods and techniques defined by the company.

What is reviewed in an administrative audit?

The administrative audit can be considered as an integral examination of the structure of an organization, whether it is a company, institution, government department or any other entity. The methods of control, the means of operation and the use of its human and material resources are also evaluated.

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Sample Payroll Audit Report

A well-done audit can make the difference between optimizing human resources management, productivity, use of time and, therefore, facilitating the achievement of the long-awaited business objectives. But to get down to work, there are some concepts that need to be clarified.

A human resources audit is a method by which a company’s policies, internal procedures, documentation and human resources programs are reviewed in order to identify key areas for improvement within the organization.

When a company grows is when this type of audit is necessary, as it makes it much easier to review the fulfillment of the functions of each of its departments.  If it were not performed, the review of data would become too complicated and, in the end, it would be difficult to have an objective and unbiased analysis, since such a review would depend on management.

Any internal audit increases the company’s chances of meeting its objectives, as well as detecting fraud or misappropriation of assets and similar problems. How? By ensuring the veracity of all the data that is accumulated throughout the activity, and which will be reviewed during the audit.

By Rachel Robison

Rachel Robison is a blogger who collects information on court filings and notices.