A vital part of daily business operations for every small business is to audit their payroll processing. Since these small businesses consist of few employees so a thorough auditing is possible. Sampling data to be used in the future is also not required. The best time to schedule an audit of the processes is at the end of each quarter. The process through which this audit works is as follows.
1. Active Employees Verified
Employees receiving a paycheck during the quarter should be verified that he was working during the time for which the check was issued. Though committing payroll related fraud is comparatively tougher for smaller business, cutting checks on employees who left can lead to financial theft. The best you can do is changing the checks for cashing with employees who left before cashing them.
2. Pay Rate Verified
The pay rate for each employee used in the processing system should be verified. The rate entered should strictly be in a written format. It should also be approved by the owner of the company or manager and professionally filed with the paperwork of other employees.
3. Hours Paid Reviewed
Compare the time for which each employee is paid by keeping a track of the time clock or any other devices used for tracking their daily in-out time. Keep a track of overtime hours of each employee as this amount adds up really fast and surpass the salary budget of these small businesses. If payments are made for paid holidays, vacation days or sick times, make sure employees receiving those are actually eligible.
4. Reports Compared To General Ledger
Compare the total amount used for taxes and gross payroll expense to the general ledger. This ensures that all the processing will be perfectly recorded. There are also companies having numerous salary accounts like separate payroll accounts for managers, administrators or sales person. Make sure each category represent the actual expense for each worker and the positions specified.
5. Tax Submission Reviewed
Companies undertaking the process of payroll services make sure that money paid as Medicare taxes, social security taxes or state employment taxes are included under business payroll taxes. The total amount paid as taxes is compared with the payroll system generated reports to ensure that the amount paid is properly reported. All computer generated total reports also undergo a manual calculation.
6. Review Bank Reconciliation
Keep a check on the bank account to ensure that all the checks issued has been cleared and there are no stale-dated checks left. The hard copy of the checks from the bank should be reviewed even if you require paying an amount for the service. Review each check and stay assured that no checks appear altered.
This being said it is high time you approach a reliable company in Sydney offering the service at an affordable price and make the most of it.