Page 89 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
T IPS &T ECHNIQUES

There is a major difference between the number and type of payroll
controls required for a single company location versus those required
for a multilocation arrangement, especially if the accounting and
internal auditing functions are centralized in just one of the loca-
tions. The risk of control problems increases in the latter scenario,
because the people most concerned with maintaining proper levels
of control are all situated in one place and cannot know what goes
on elsewhere. This type of environment requires significant addi-
tional controls, such as the centralization of payroll check storage,
occasional verification of the existence of employees, and close
examination and approval of submitted time sheets.

the following list of controls and then select only those that will improve
the control environment. The controls are described in the following
subsections.

Employee Advances

Employees may ask for advances on their next paycheck,or to cover the
cost of their next trip on the company’s behalf. In either case, it is easy
to lose track of the advance.The following controls are needed to ensure
that an advance is eventually paid back.
• Continually review all outstanding advances. When advances
are paid to employees, it is necessary to continually review
and follow up on the status of these advances. Employees who
require advances are sometimes in a precarious financial posi-
tion and must be issued regular reminders to ensure that the
funds are paid back in a timely manner. A simple control
point is to have a policy that requires the company to automat-
ically deduct all advances from the next employee paycheck,
thereby greatly reducing the work of tracking advances.

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