Internal Audit : An Essential Tool For The Payroll Function

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Internal Audit is an essential tool available to the payroll function.

“The role of internal audit is to provide independent assurance that an organization 's risk management, governance and internal control processes are operating effectively”

What is internal audit? (2015)

As a new payroll system was recently installed our internal auditors were asked to look at the robustness of the payroll controls in place.

A comprehensive test was carried out and a few areas of concern were raised.

These were mainly around separation of duties as the Payroll Officer had complete authority over the payroll function, from inputting all documents to producing and submitting the BACS file.

Although no instances of fraud were found it was highlighted as a major area of risk to have one individual in charge of the complete payroll process.

Following on from the internal audit report further controls have been built into the payroll process.

1) The Human Resources Module was added to the Payroll software, consolidating the payroll and HR databases in a single entity. All new starters and contractual changes are now input by Human Resources prior to the Payroll Officer calculating the pay.

2) Audit files of input of each user produced on a monthly basis.

3) The Finance Officer to check the payroll prior to the BACS file being created.

4) The Payroll Officer to prepare the payroll, the Company Accountant to authorise the payroll and send the bacs file.

At the end of every

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