CHAPTER 8: Employee Costs

Human Resources Department Risks

- timesheets may not be approved; overtime
- new starters/leavers may not be authorised
- possibility of data breach

Payroll Risks

- responsible for the wages to be paid to the employees
- new joiner can be missed off
- a leaver has not been removed
- miscalculation of wages

Finance Department Risk

- correct amounts of the wages are not recorded
- making the actual payment
- a cash pay packet is given to the wrong individual
-

Controls for the Calculation of Wages, Salaries, and Taxes

- starters and leavers are authorised by senior managers of HR; this will prevent people who have left being paid, as well 'authorisation' suggesting that there are not fictitious people on the payroll
- time sheets or clocking in and out arrangements exist for those paid per hour.
- personnel files are maintained for all employees and regularly reviewed to the payroll information.
- qualified/trained staff calculate payroll, restricted access to the payroll system and reliable software is used.

Controls for the Recording of wages and salaries in the accounting system

- payroll reconciliations performed using a control account.

Controls for the Payment of Wages, Salaries and Taxes

- segregation of duties between those preparing payroll and those distributing payments
- for cash payments identification should be provided prior to payment
- for BACs payments, there should be a review and authorisation prior to payment by someone senior.