Undertaking a Special Payroll Review provides management and business owners with additional confidence in a company’s payroll systems. We provide independent confirmation to ensure your business performance is best practice, meeting industry standards and protecting their staff’s best interests.
In a recent special payroll review performed by CABEL Partners, we found numerous risk issues that could result in a negative long term staff impact if not dealt with by the directors.
CABEL Partners made several recommendations to reduce the risk to staff, high employee turnover and employee dissatisfaction.
The Special Payroll Review is designed to assess the capacity of the company to provide key reports to management and the directors, conduct a gap analysis of current resources and policies against best practice, and assess generally the robustness of its employment system.
CABEL Partners Special Payroll Review focuses on businesses payroll and human resources systems, including:
Leave management (Long service leave, annual leave and leave loadings)
Compliance with workers compensation legislation
To enable easy understanding of the risks CABEL Partners applies a traffic light system highlight the level of risk.
RED: Significant- Poor or no controls. Pervasive and systemic weaknesses identified.
ORANGE: High –Significant control weaknesses identified.
YELLOW: Moderate- Several control weaknesses of concern identified.
GREEN: Low –Small number of minor control weaknesses/opportunities for improvement identified.
CABEL Partner’s review and recommendations identified from a Special Payroll Review review highlights how businesses can reduce risk and build confidence with their existing systems. If you would like to see if you are at risk, click here.
Examples of risks identified:
RISK LEVEL YELLOW: ANNUAL AND LONG SERVICE LEAVE PROVISIONS
The organisation being reviewed had many staff members with extensive outstanding holiday and long service leave.
Regular use of leave is a risk reduction tool, a management succession tool and a financial saving tool. Relieving personnel in all senior positions is a tried and tested procedure for good reason. As an employee’s remuneration increases so does the accrued liability which results in salary increases having a multiplier effect.
CABEL Partners recommended a program for reduction in accrued leave to the agreed level.
RISK LEVEL YELLOW: EMPLOYMENT CONTRACTS
The following illustrates some anomalies detected in the testing of employment contracts:
STAFF A – Original contract of employment was dated 1998 and referred to normal working hours being 38 hours but in practice the normal working hours were 45 per week.
STAFF B – contract of employment was dated 2005 referred to normal working hours being 45.
For both of these employees, there was no subsequent amended contract of employment. As per the Fair Work Act, an employee can work a maximum of 38 ordinary hours in a week. There may be a contingent liability for underpaid wages.
CABEL Partners made recommendations to have the employment contracts reviewed in this case.
RISK LEVEL YELLOW: APPROVAL OF PAYROLL FOR PAYMENT
Evidence of EFT approval made on line for some payroll payments were not retained, thus we are unable to ascertain that staff with the appropriate level of authorisation accessed the electronic payment system. In the absence of the authorised signatories, the password and access to the electronic payment system has been granted to non-authorised staff.
Potential risk of fraudulent misappropriation arises. Risk of management override of controls.
CABEL Partners made recommendations to alert management to the implications of this action.
Beyond protecting your staff’s best interests, if the business did not act on our recommendations to reduce their risk, they may face several penalties.
Is your Payroll risk free? Complete the free Payroll Stress Test, click here
Does your employment systems and procedures build staff confidence and meet industry standards?
If you are interested in understanding the report’s findings, please call Sean at (02) 8071 0300 or email email@example.com
CABEL Partners is a boutique Chartered Accounting firm offering accounting and audit services to small to medium enterprises, individuals and not for profit organisations. We specialise in specialist tax advice and start up business mentoring. CABEL Partners knows what you want! CABEL Partners will provide certainty and complete your work with clear and regular communication, transparency, and a pro-active attitude.
Email - firstname.lastname@example.org Office: (02) 807 10 300 A: Level 5, 1 James Place, North Sydney 2060