Performing a payroll audit

Payroll is one of the basic functions in business operations. Accurate timekeeping ensures your employees are paid correctly and on time, keeping them satisfied with their jobs. Unfortunately, payroll is also easily mismanaged. Manual systems are often overly complicated and subject to human error, resulting in inaccurate paychecks, confused employees and a frustrated HR department. There are many indications that may reveal a business needs to review its payroll process, from constant employee complaints to a switch to lean operations. No matter the reason, a payroll audit can make the timekeeping process more efficient.

How to complete an audit
To perform a payroll audit, business leaders must go through every part of the timekeeping process. Mapping out each step helps identify weak or redundant methods. Supervisors need to check for inaccuracies in all areas, including pay rates, sick hours, vacation and paperwork such as employee tax forms and time sheets. This information should then be verified with employees, managers and the payroll department.

If you find repeated mistakes, hold a small meeting with your supervising and payroll staff to collaborate on solutions. You may find employees don’t understand your attendance expectations or that you need to switch from manual time collection to a software solution.

Establish clear policies
Employees need to understand exactly how payroll works within your business. Otherwise, they may not realize they’re recording their working hours incorrectly. Employees may even be tempted to deliberately claim false time if they can exploit a loophole. Executives and management should create clear timekeeping policies that are fair yet firm. These policies should be written down and stored in a location that’s easy for employees to access.

Fixing human error
Humans aren’t perfect, so payroll errors will continue to occur after your audit. You may have reduced the numbers of mistakes your business runs into, but there’s always room for improvement. Time collection software reduces employee oversight and makes the payroll process more efficient. A customized Dynamics NAV time collection module works specifically with your operation’s unique requirements. The software eliminates manual time entry and calculations, replacing them with efficient barcode scanning. Thus, time data is recorded instantly and accurately, and the software can easily adjust for exceptions like overtime and varying shifts. A proper software solution also integrates with mobile devices. This way, employees can record their time at any location within your building or buildings.

A proper audit identifies problems within your payroll process. After an audit, businesses should ensure their timekeeping policies are clear and consider adopting an automatic time collection system.

Interested in learning more? Download the “Time Collection Dynamics Data Sheet.”