Page 25 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
notification of the accounts to which payments are to be sent and
the amounts to be paid must be assembled, stored on tape or
other media, and sent to the bank (see Chapter 9,“Payments to
Employees”).

14. Deposit withheld taxes. The employer must deposit all related pay-
roll tax deductions and employer-matched taxes at a local bank

that is authorized to handle these transactions. The IRS imposes
a rigid deposit schedule and format for making deposits that must
be followed in order to avoid penalties (see Chapter 7, “Payroll
Taxes and Remittances”).

15. Issue paychecks. Paychecks should, at least occasionally, be handed
out directly to employees, with proof of identification required;
this is a useful control point in larger companies where the payroll

T IPS &T ECHNIQUES

The control point for periodically handing out paychecks only to
those who can prove their identity is not entirely useful when many
employees use direct deposit, and therefore do not care if they
receive an accompanying remittance advice or not. This is an espe-
cially galling problem for companies that may have many locations
or that have employees who travel constantly. In both of these cases,
a physical identity check is not a viable control. An alternative control
is to periodically issue lists of paycheck recipients to department
managers so they can see if any names on the lists are not those
of current employees. But this is a weaker control, because the
department managers may not take the time to verify this informa-
tion. A backup control is to compare paycheck information to other
information that is independently maintained for current employees,
such as free life insurance that all employees sign up for when hired.
A false employee name in the payroll register will not appear on a
corresponding list of benefits, indicating a potential control problem.

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