How to do a payroll audit

It’s not the most glamorous of HR tasks. But outdated payroll systems waste hundreds of thousands of dollars every year. Here’s how Pfizer brought its processes into the modern age.

Although pharmaceutical giant Pfizer has experienced remarkable business success in the past decade, when it performed an internal audit of its payroll system, it realised it was throwing away money by using dozens of vendors for only a handful of countries.
 
This highlights a problem that many organisations around the world experience: neglecting to ensure that payroll processes are as up-to-date and cost efficient as possible. 
 
Companies looking to update their payroll systems should take the following steps:
 
  1. Place the current system through an assessment to see whether it is compliant.  “You can just say, in this live payroll, we’re going to check 15 things and then check them all the way through the system – making sure it’s entered correctly, and getting the results you’re expecting,” said Tracie Sawade, customs business analyst with Ultimate Software.
  2. Evaluating whether workers would appreciate mobile access to pay and benefits information
  3. Deciding between in-house system or outsourcing to a vendor.  Outsourcing can save money, but companies lose autonomy and need to contact a third party to access the system.
  4. Test potential vendors’ services to ensure they work as advertised.  “Do an RFP and when you get results from vendors, analyse them, set up demos of the system, ask the vendor to show you how to do the 10 things that are most important to your business,” said Sawade.
 
Finally, HR executives should check the vendor’s references, both among current customers and those who left the product.  That way, companies can gain an understanding of that particular payroll system’s advantages and drawbacks.
 

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