Flashcards for:
Payroll Audit

Meeting pay deadlines is important to ensure timely payroll processing, determine and follow a consistent pay schedule (monthly, semi-monthly, bi-weekly, weekly), and consider on-demand pay options if needed.

You can confirm time and attendance records, account for sick/vacation time affecting pay, and avoid worker misclassification using tools like BerniePortal for tracking time/attendance and PTO.

The step involves updating entries for W-4 or residency changes and double-checking deductions for benefits such as HSA, FSA, and 401(k) contributions.

Use a separate payroll bank account, verify payroll totals in the general ledger and bank statements, and ensure correct and timely tax deposits using IRS Form 941.

Payroll audits are considered high stakes because payroll errors can directly affect employee livelihoods and result in costly government compliance penalties.

Variable pay components such as overtime at 1.5x rate, bonuses, commissions, hazard pay, and supplemental wages should be verified.

A key benefit of conducting regular payroll audits is maintaining compliance and efficiency and avoiding common payroll mistakes such as misclassifications, miscalculations, and missed deadlines.

HRIS systems, such as BerniePortal, can be used to validate automated inputs for pay rates, W-4 changes, and residency effects.

Payroll records should be retained for at least 3 years in compliance with the Fair Labor Standards Act (FLSA).

The first step is to limit your scope, which involves sampling a percentage of the workforce for review and establishing a time frame (e.g., 2+ consecutive pay periods once a year).

Key reasons include ensuring accuracy in employee pay, maintaining compliance with government regulations, detecting and preventing both errors and fraud, updating tax withholdings and benefit deductions, revisiting processes for calculating overtime and tip credits, and proactively addressing issues before they result in complaints or penalties.

Pay calculations should include bonuses, commissions, reimbursements, stipends, and correct premium and contribution deductions. Wage garnishments should also be handled properly.

Analyze the audit findings, report results to leadership, propose improvements in processes like timesheet approval and bonus authorization, and communicate any changes clearly to the workforce.

Misclassifying workers can result in a loss of overtime pay, certain protections, and benefits. It can also lead to significant legal and financial penalties.

Important tax forms include W-4 forms for employees, W-2 forms sent yearly to employees, 1099 forms for contractors, and IRS Form 941 filed quarterly.