The payroll cycle broadly covers seven key functions:
Authorising payroll rates and deductions etc.
Time and attendance recording
Payment of payroll
Remittance of various payroll taxes (PAYG/ Payroll Tax)
Preparation of payroll tax returns (i.e. BAS)
Payroll related costs commonly represent a significant part of the total costs of any business. The payments made are usually large and therefore present a set of unique risks.
Ensuring that you have adequate internal control in this area is imperative.
Some questions to consider in evaluating controls in the payroll cycle are:
Is proper segregation of incompatible duties maintained (i.e. bank signatory is separate from person processing payroll)?
Are access controls in place?