Have You Tested Your Payroll Lately
Here are some quick payroll and personnel tests to stay better informed of potential risk areas:
Is the company withholding properly in accordance with IRS guidelines? Is any of the withholding being charged to the company? Divide withholding amount into gross earnings by employee. Are any percentages too high or too low? Is there a W-4 on file to support the number of withholding allowances claimed?
Is the company incurring more benefits expense than it should? Test employee benefits deductions by comparing employee deduction amounts to the statements for Medical, Dental, and 401(k) contributions.
Is there an active employee for every account in your direct deposit file? Do multiple employees share the same account number? Download several weeks of direct deposit files to verify employee names and account numbers are valid.
Do any of your employees share the same address as one of your vendors? Identify the existence of related parties by checking employee addresses against vendor addresses. Ask employees if they are aware of any related parties.