How to do a Payroll Security Audit

How to do a Payroll Security Audit (1201 x 601 px) (1)

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Payroll security is vital to the function of any successful business. It doesn’t matter how many people your organization employs – if you can’t get accurate paychecks to your employees on time, your business won’t thrive.

Similarly, failure to secure your data can put both the vital information of your employees and your business in danger, which could potentially cost you thousands. In order to make sure that your payroll and information are safe, you must perform regular payroll security audits.

What is a Payroll Security Audit?

A payroll security audit is the process of examining each component of data entry of your payroll for accuracy and security. This ensures compliance of all contributions and withholdings by your organization, as well as documenting the security procedures taken to protect payroll data.

In order to properly perform a payroll security audit, there must be an organizational understanding of how to keep your payroll secure, as well as how other businesses ensure that their own payroll security systems stay up-to-date. Executing an audit will only help your company grow and prevent many common payroll errors.

Why Payroll Security Audits are Necessary

Payroll security audits are necessary to maintain integrity in a system that requires multiple inputs that have very serious real-world implications. As we noted, the accurate and timely pay of your employees is the foundation for a collectively bargained employment agreement. Similarly, being able to legally pay them properly is impossible if your benefits and payroll tax systems are inaccurate.

Put more simply, a payroll security audit lets you prove that your business’s financial system is worth trusting. Without an audit, your business runs the risk of payroll errors that likely could have been avoided, and ultimately resulting in you losing the trust of your employees.

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Understand Your Purpose

Before you begin your security audit, you should define why you’re doing an audit in the first place. Are you worried about issues of efficiency or security? Are you going in with the intent of making upgrades to hardware, or are you more concerned about employee protocol? Craft a list of the roles and practices that should be housed under an ideal payroll security umbrella, and use them as metrics going forward.

Audit Your Payroll

Conducting a standard payroll audit is a good way to get started with your overall security audit. This time-intensive process can pay huge dividends. This is a good chance for you to notice issues before they result in payroll fines or other legal trouble, so examine your records with as much attention to detail as possible. Make sure that all of the numbers add up, and that you keep a running tally of any correctable issues. This should help you to differentiate between outliers and more serious issues that might need to be addressed later.

It may be a good idea to bring on an outside consultant during this phase to make sure that the audit is performed objectively. Some of the most common payroll issues stem from internal problems, so having an outsider comb through your payroll processing and data will help to ensure that the information is being analyzed without bias. Once you have access to the data, you can start talking to the people who use it on a regular basis. You might be surprised by the difference between what an outsider picks up and what your employees experience.

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Talk to Your Staff

Your financial team needs to play a major role in your payroll audit. As they are the individuals with the highest utilization of your payroll systems, they’ll be able to tell you about any system-wide issues. Depending on the size of your business, you may need to interview everyone who has payroll department responsibilities – different parts of the department may be privy to information that others aren’t. If you can gather all of that data, you will get a clearer picture of what your employees experience and how your payroll systems actually work.

This is also a good time to get feedback on your systems. If something isn’t working correctly, there’s a good chance that your employees are either ignoring that function or finding a way to work around the problem. This can lead to security breaches, so knowing what needs to be fixed is absolutely vital. Encourage your employees to come up with a list of things that they would fix about your payroll system and try to determine if those additions will help you to better enact the best security practices for your business.

Check Your Systems

Your company’s IT infrastructure and data protection plays a significant role in your payroll security. As such, a payroll security audit acts as a miniature IT audit as well by looking specifically at systems that might impact your payroll. This is almost certainly something that your IT staff will be equipped to do, so let them examine the internal systems and make recommendations about how they could be improved. Again, you’ll need to measure the response of your team against your list of best practices in order to make sure that everything is in order.

Related: Common Payroll Security Issues

In addition to the technical side of things, you’ll want to look at how your employees interact with the payroll system. Are they practicing good data security measures? Is it possible that some employees are letting too much information out into the open? Does everyone in your place of business understand the dangers of things like phishing and other forms of social engineering and internet scamming? You need to be able to answer all of those questions before you finish this part of the audit. Even an incredibly secure system can still be prone to problems if your employees aren’t taking security seriously.

Analyze the Data

Your final step should be to analyze the data that you’ve collected so far. What kind of picture does this paint of your payroll security? What does it say about your company’s employees, procedures, and systems? Does it show that you’re following the best possible security practices, or does it show that you need to shape up in key areas? The data that you gather should be compared against your purpose for doing the audit in order to make a plan.

This kind of audit is only useful if you can gather actionable data, otherwise your business’s audit and all of the information you’ve gathered is wasted.

Secure Payroll Services in Phoenix, AZ

At Paytech, we understand how important your payroll records and their integrity are. We’ve spent decades working with businesses of all sizes to ensure that their payroll systems are secure from beginning to end. Ultimately, our goal is to save your business time and money while reducing the stresses of necessary burdens like payroll processing.

If you’re ready to get your small business payroll services under control, you don’t have to do it alone – contact Paytech for your free payroll security audit today.

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