January 19, 2021Payroll Continuity, Payroll Support
What is a Payroll Process Review and Why is it Important?
If you are a business with employees, you have a payroll process. And your payroll process needs to be accurate, updated and properly documented. Any hiccup in a manual payroll process can be the catalyst for a slew of compliance and tax issues, and the last thing your company wants is to be audited and fined for mistakes you didn’t even know you were making. Below, our very own Anita Kulik, CPP, Consulting Manager for Payroll Services, explains why many companies contract to have a payroll process review completed whenever changes occur or new software is implemented.
Payroll Continuity is Business Continuity
During a Payroll Process Review, an expert consultant examines the entire sequence of events that coordinate each payroll cycle from start to finish. Your consultant will identify areas of compliance risk or data security, document your process, and communicate key insights and recommendations about how to improve your process. Receiving this valuable feedback from a Wise payroll professional can help you implement a payroll continuity plan, reduce compliance risk, and incorporate compliant segregation of duty practices. The process review will also raise your awareness of security requirements around Personally Identifiable Information (PII) as well as compliant communication and data storage procedures.
According to Anita, “the main reason someone asks for a payroll process review is that there is something that is just not clicking within their process and they are trying to understand what it is. They might not be properly staffed, or perhaps they are experiencing too many payroll mistakes and want to understand why.”
Anita continues by explaining how she begins a payroll process review by reaching out to the client’s core payroll team to collect knowledge on their processes: timing, new hire/termination workflow, reporting, wage garnishments, and compliance issues. From there, Anita offers insightful recommendations on what they can improve upon within their processes. The payroll process review is the initial step towards uncovering what is going right, what could be improved and how Wise can help you make your process better.
“One of the biggest issues we come across is that a payroll department is overwhelmed with manual processes, and they don’t have enough automation,” Anita explains. “They have features and modules that they are not utilizing, or they are missing important deadlines [because they rely on too many manual processes].”
Anita continues, “maybe a payroll department is failing to complete pre- and post-auditing or they are not keeping records. A lot of clients don’t have a backup plan, or they have compliance issues around regulations in different states. A lot of clients just don’t know what they don’t know. They need someone to come in and determine why these mistakes are being made.” The ‘not knowing what they don’t know’ is a common theme. Many times, it’s a matter of imparting information and helping clients achieve a comprehensive perspective amidst the sea of critical details.
Payroll Process Documentation is Crucial, But Rarely Executed Properly
If you have an internal payroll processor, they need to have some form of documentation on their processes. This is especially important if they are a one-person department. Anita tells us that 1 out of 5 clients she works with does not have proper documentation.
“Aside from continuity, proper documentation helps you compare where holes and gaps are and ensures you have documentation that isn’t outdated,” Anita states. “These documents can also be used as a training tool for new hires.”
It is smart to review your documentation regularly to make sure it’s updated and accurate. This is because processes can change so frequently. “What if you switch payroll and time /attendance systems, or you change your frequency of pay? What if you acquire another company? Update your important process documents once a year, or when a major event happens,” says Anita.
Don’t Risk Compliance Issues
According to Anita, many businesses have unintentionally exposed themselves to compliance risks when they lack proper documentation or staff. The greatest risk is the threat of fraud. “You cannot set yourself up as a company to be exposed like that,” Anita says, “regardless of company size.”
With COVID-19, there may even be more compliance issues that are going to develop into major problems. With last year’s mass shift to remote work affecting taxes and payroll compliance more than many companies realize, payroll processors need a plan in place to prepare and react to COVID wrinkles without a dreaded audit. Proper documentation has always been important, but it is even more so in the midst of a pandemic. With the very real potential of more pandemic relief legislation on the horizon, and businesses still suffering critical personnel reductions, it makes sense to assess now and be ready for another unpredictable year.
Call on Wise Consulting to Perform a Payroll Process Review
In a payroll process review, we don’t just make recommendations; we provide the support, guidance and strategy to help you succeed.
We want you to be equipped with the knowledge of how to streamline your tasks for better efficiency, maintain payroll and tax compliance, and address gaps before they get out of hand. Wise consultants can guide your existing payroll processes, troubleshoot and address payroll transaction issues, and help you update and monitor documentation and pre/post-auditing checklists. Improve your payroll accuracy and compliance with Wise Consulting—contact us today to schedule a consultation.
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