There may not be a more important expense to an organization than payroll and benefits. Payroll and benefits must be paid on time and exactly correct in order to maintain employee satisfaction. In addition, it is imperative that taxes are appropriately withheld and remitted to the correct agency. Therefore, when a company determines it is necessary to use a third party for their payroll, controls must be in place to ensure the payroll is completed correctly, on time, every time. A proper control environment must be maintained to achieve this goal.
- New Payroll Information and Changes – Changes in personnel of a company happen on a frequent basis. Properly setting up a new employee, terminating employees, and other changes must be completed accurately and timely. Incorrect entry into the payroll / benefit software can cause employees to receive an incorrect amount of pay.
- Payroll / Benefits Administration Processing – A quality control environment must be in place to ensure the information received from your clients is processed with integrity and quality throughout the entire process.
- Receipt of Funds – Receipt of funds from the client must be completed in a secure environment. The security and privacy of bank account information must be maintained at all times.
- Payment of Payroll / Benefits – Ensuring the payments are sent to the correct employee for the correct amount is imperative to a successful relationship with your clients. Controls must be in place to keep client funds separate from receipt through deliver. Whether the funds are deposited electronically in the employee’s account or a paper check is mailed, the private and confidential information must be secured.
- Reconciliation – All funds received from a company must be accounted for. A reconciliation is the best way to ensure that all funds were used for the appropriate purpose, whether paying fees, benefit expenses, payroll, or other expenses. These reconciliations should be prepared on a frequent basis and reviewed for accuracy.
- Reporting – Your clients rely on you to provide accurate and timely reports and information which are included in the financial information of the Company. This information may be used for management decisions, external audits, or tax filings. Therefore, controls should be in place to verify the integrity of the reports provided.
While your clients are able to outsource the payroll and benefits administration, it cannot outsource the risk and responsibility for ensuring the payments are made timely and accurately. Your clients need assurance that the information provided to your company is received in a secure manner, processed appropriately, funds received in a controlled environment, proper payments are made, and reporting is performed in a timely manner.
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