Payroll internal controls exist to ensure payroll is properly disbursed to your organizations employees. Payroll internal controls procedures ensure that that payroll is accurately recorded, payroll disbursements are properly recorded and related legal requirements (such as payroll tax deposits) are complied with. Payroll transactions should be properly recorded and authorized. Checks should be appropriately distributed and employees validated. There are several key aspects to payroll internal controls.

Data Collection

A key aspect of payroll internal control is establishing proper data collection. Choosing the right data collection method to track workforce time and attendance is vital to optimize payroll internal controls. ADI Time offers a diverse range of industry leading data collection technologies to fit your unique work environment and organizational needs, while reducing the time and cost involved with monitoring employee time and attendance. Supervisors approve each employee’s timecard before submitting it to payroll for processing.

Employee Personnel Data

ADI Time helps organizations maintain employee's personnel information such as an employees salary and his dates of employment. ADI Time also assists with your payroll internal controls by automating key policies such as vacation, personal, sick leave and holiday. Our software also keeps a record of benefit days employees have taken and ensures compliance with your company's policies.

Best-of-Breed Payroll Provider

At ADI Time we believe that you should have the option to choose the payroll provider that is right for you. Our interfaces are standard to every major payroll provider, allowing you to choose best-of-breed. Your payroll provider of choice will handle your payroll processing along with proper tax filing. ADI Time will make sure all payroll information is accurate, increasing your payroll internal controls. It is important remember that your organization retains final responsibility for accurate and timely reporting and depositing of taxes when using a service bureau. Therefore, it is important to review each payroll check and payroll internal control report.

Payroll Internal Controls Checklist

Best practice is to create a payroll internal controls checklist or a payroll internal controls questionnaire to constantly monitor if your organization’s payroll internal controls need improvement. Payroll internal controls checklists should include:

• Review and update supervisor approval process.
• Periodically audit attendance records for accuracy and compliance to policy.
• Approval of all changes made to time and attendance records.
• Audit ledgers for accuracy of recorded transactions.

You should enforce a segregation of duties; meaning, for proper payroll internal controls payroll should be approved by someone other than the person responsible for inputting the information. Also, for proper payroll internal controls someone other than the person who inputs or authorizes payroll should distribute the payroll checks. A person independent of input and authorization responsibilities should review labor distribution reports monthly. This review should be documented via initials Also, many organizations choose to have a separate banking account for payroll that is used for issuing paychecks and paying government withholding and other taxes related to payroll.