21st March 2016
A recent BBC news story highlighted just how bad things can get if you don’t regularly conduct a payroll audit in your company.
The Nigerian government has just recovered over £8million every month by removing 24,000 non-existent workers from its payroll, some of whom were receiving multiple salaries.
Of course this is an extreme example of how poor auditing, procedure and checking can send things out of control within a payroll team but business owners should audit payroll processing as part of regular business operations
Small business owners usually have a smaller number of employees but often don’t appear to have the resource to carry out auditing, but ignoring even a sample audit could be a mistake. Industry professionals often talk about quarterly audits but how practical is this, and are bigger businesses guilty of ignoring the problem.
At the recent Payroll World Spring Update a payroll manager at a well-known cruise company highlighted a fraud that went on undetected for five years. No payroll audit had been undertaken.
There are often, however, simple checks that can be made to protect your payroll, company finances, and in a social savvy internet world, your reputation.
- Do they actually work for me anymore?
It may sound stupid but it’s amazing how many people may still be on your books even though they may not work for you anymore. A real loophole for payroll fraud.
- Am I paying them the correct amount?
Right basic salary. Right hours paid. Right Overtime. Anything out of the ordinary?
- Are you looking for the extraordinary?
A quick comparison and examination should ensures that your payroll reflects the correct payments for different roles within your company
- Checked your bank for anomalies lately?
Gather together a list of any changes to your business, especially leavers, and look out for anomalies.
Of course getting back time to carry out a regular payroll audit can be difficult and many shrewd businesses outsource their payroll to give them the time to analyse. Indeed a recent report highlighted that businesses can grab back 20% more time through outsourcing payroll. Outsourcers will often flag anomalies or duplicate bank account details back to companies for investigation.