Page 90 - Essentials of Payroll: Management and Accounting

Payr oll Pr ocedur es and Contr ols
• Require approval of all advance payments to employees. When
employees request an advance for any reason—as a draw on the
next paycheck or as funding for a company trip—it should
always require formal signed approval from their immediate
supervisors. The reason is that an advance is essentially a small
short-term loan, which would also require management
approval. The accounts payable supervisor or staff should only
be allowed to authorize advances that are in very small
amounts.

Payroll Checks
The storage, printing, and distribution problems associated with checks
of all types certainly apply to payroll checks.The following controls are

particularly applicable to those companies that process their payrolls in-
house, since they handle check stock. However, even companies that
outsource their payroll activities should consider the controls related to
bank reconciliations, uncashed checks, and signature cards. If employees
are paid solely through direct deposits, then these controls do not apply.
They are:
• Control check stock. The check stock cannot be stored in the
supply closet along with the pencils and paper, because anyone
can remove a check from the stack, and then they are only a
forged signature away from stealing funds from the company.
Instead, the check stock should be locked in a secure cabinet,
to which only authorized personnel have access.
• Add security features to check stock. With today’s advanced
technologies, checks can be successfully modified or copied.
To counteract this, purchase check stock with such security
features as a “Void” logo that appears when a check is copied,
microprinting that is difficult to copy, or holograms that are
difficult to reproduce. A particularly effective method is to
print a small lock icon on the face of a check, which warns a

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