by Mark Ward
I love working with so many different businesses.  It is so cool to see a business grow, while adapting to today’s ever changing and challenging business environment.  Today’s businesses have to be efficient to stay competitive.  In trying to be efficient, I often see businesses assign payroll responsibilities to just one employee.  I agree, it is tempting to assign all payroll responsibilities to one employee.  However, avoid this temptation.  THE SEPARATION OF PAYROLL RESPONSIBILITIES IS ESSENTIAL TO YOUR BUSINESS and will help protect involved employees while preventing the possibility of fraud.

I recognize that we all have limited resources, but even a little separation of payroll responsibilities will help provide a system with some checks and balances.  Within your company evaluate the many different processes that are related to payroll.  This will range from hiring employees, collecting employee forms, upkeep of pays and deductions, time collection, reporting payroll, reviewing/approving payroll, distributing payroll, recording payroll in financial system, reconciliation of bank accounts.

Once you’ve identified the different tasks associated with payroll, now develop a system that will provide some checks and balances.  If an employee is responsible for collecting time cards, have a different employee verify the accuracy of the time cards.  The employee who is responsible for managing employee data related with pays and deductions shouldn’t be the one approving and reviewing the final payroll reports.  Recording/Reconciling payroll transactions in financial systems needs to be done by someone who is familiar enough with the business to know of changes, and will take the time to ensure the proper approvals were received along the way.

My experience has shown that developing a system of internal controls is well worth the time and effort.  The payroll process will flow smoothly while also protecting employees that have payroll related responsibilities.

If you have questions or would like an independent audit of your payroll processes please don’t hesitate to contact Payroll Experts at (801)221-3732.


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