Yesterday’s Advisor featured tips for finding payroll fraud; today, consultant Vicki Lambert CPP’s tips on who should do your payroll audit, plus an introduction to BLR’s popular HR Department of One.
Lambert, who offers payroll training as “The Payroll Advisor,” says that you can’t give payroll auditing over to just anyone who’s free. There are three points that are critical for choosing the auditor.
1. Not the Person Who Does the Job
First, says Lambert, you want someone other than the one who does the job to do the audit. The person in the job doesn’t have much incentive to find mistakes. And, of course, you won’t uncover any fraud if you don’t use someone outside.
In addition, one of the objectives of the audit is to catch bad habits, that is, things that employees do thinking that they are the right thing to do when actually they are counter to law or policy. You won’t find those bad habits if the person in the job does the audit, says Lambert.
2. Know Rules and Regs
Second, the person conducting the audit should know all the laws, rules, and regulations concerning the topic being audited.
That means you’re going to have to thoroughly train the person doing each individual segment of the audit, says Lambert. Put the rules and regs in writing and include both federal and state regulations. This should not be done from memory but from primary sources such as the DOL/IRS website.
Secondary sources (such as payroll manuals) can also be used if the source is comprehensive including source cites. You can compile this information prior to each audit segment or you can prepare the entire audit book prior to starting the audit.
Don’t forget to include the company policy for each topic, says Lambert. Many times the federal or state requirements are exceeded by company policy. And, of course, employees can sue if company policy is not followed even if the federal and state requirements are, so the policies should be included in the audit as well.
If you don’t have a policy or if have an outdated policy, you need to write one or update the existing one, says Lambert.
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3. Create an Audit Plan
Third, says Lambert, it’s important to set forth a comprehensive list of all payroll tasks to be audited. This list should be in writing, and completed prior to beginning the audit. This gives a “playlist” of the tasks to be accomplished and helps with assembling the law book discussed above. It also assists in compiling the time frame and work schedule for the audit. And it helps to insure that no one “forgets” a segment of the audit.
Finally, says Lambert, there is an added bonus of doing the audit—it’s a great opportunity for cross-training.
Dealing with payroll fraud—one of, what, a dozen critical challenges on your desk? From hiring to firing, HR’s never easy, and in a small department, it’s just that much tougher.
BLR’s Managing an HR Department of One is unique in addressing the special pressures small HR departments face. Here are some of its features:
- Explanation of how HR supports organizational goals. This section explains how to probe for what your top management really wants and how to build credibility in your ability to deliver it.
- Overview of compliance responsibilities, through a really useful, 2-page chart of 23 separate laws that HR needs to comply with. These range from the well-known Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and new healthcare reform legislation, to lesser-known, but equally critical, rules such as Executive Order 11246. Also included are examples of federal and state posting requirements. (Proper postings are among the first things a visiting inspector looks for—especially now that the minimum wage has been repeatedly changing.)
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- Training guidelines. No matter the size of your company, expect to conduct training. Some of it is required by law; some of it just makes good business sense. Managing an HR Department of One walks you through how to train efficiently and effectively with a minimum of time and money.
- Prewritten forms, policies, and checklists. These are enormous work savers! Managing an HR Department of One has 46 such forms, from job apps and background check sheets to performance appraisals and leave requests, in both paper and on CD. The CD lets you easily customize any form with your company’s name and specifics.
If you’d like a more complete look at what Managing an HR Department of One covers, click the Table of Contents link below. Or, better yet, take a look at the entire program. We’ll send it to you for 30 days’ evaluation in your own office with no obligation to buy. Click here, and we’ll be happy to make the arrangements.