Seven smart internal controls you can use to protect your Payroll system from fraud
Your payroll is your first and best way to ensure you pay your employees the right amount and, more importantly, tax them right.
But just like with all control systems, it has loopholes that your staff could abuse. If this happens, you stand to lose a lot of money.
But there are seven smart internal controls you can use to stop the abuse and save your company's money. Read on to find out what they are.
Three accounting record risk areas to watch out for
Seven internal controls to protect your company from payroll fraud
The Practical Accountancy Loose Leaf
recommends that ony one of your managers manage payrol
l. And they should use these seven internal controls when they handle this sensitive information:
1. Only add a new employee to your payroll after they've signed their contract. The manager in charge of payroll must meet and approve the employee before they add them to payroll.
2. Use your new employee's contract to add them to payroll. It acts as proof that the person is a new employee and confirms their salary amount.
3. Set up your payroll system so it requires management authorisation to add new employees to the payroll.
4. Do payroll checks on a monthly basis. You must also sign off on your payroll reports so they can act as evidence that you've checked your payslips.
5. Compare monthly payroll totals. This will highlight any strange payments which you must investigate immediately.
6. Only your payroll manager should make changes, such as increases or decreases.
7. If your payroll programme can create a report of all the changes made for the month, review this each month to check for any unauthorised changes.
These internal controls can help you avoid payroll fraud, such as.
The payroll fraud your company may face
So implement these internal controls today to ensure your payroll is correct and fraud-free.