Who Should Sign Off On Payroll Reports?

Who should sign off on payroll reports? VP, Finance or VP, Ops or Both? Facts - HR is managed by VP Operations. - We used a third party for back office accounting (GL, AP, Payroll, Audits) - Third party processes payroll and submits to paychex. - The internal payroll person at our company was eliminated years ago when the payroll service was outsourced. - HR oversees all hiring, timecards, etc. - Payroll reports are not reviewed prior to paychecks being issued. (this will change!) - Moving HR under VP, Finance not an option at this time. I'm guessing that the VP, Ops should sign off on the reports first since he is managing HR and I would be signing off on the total payroll dollars? HR doesn't want to look at the payroll reports because the payroll person that was eliminated was under HR and their feeling is that the payroll reports are now the responsibility of finance. Just trying to get your input on which group should be responsible for which part of the payroll process from generating payroll through signoff final reports so I can work the VP, Ops on a solution from a responsibilities/audit/fraud view. Thank you!

Answers

Keith Perry Director of Global Accounting • January 23, 2014

It certainly depends on the structure of your company. I've always moved to a model where one team is responsible for executing the payroll, and another reviews it. I've had CEOs that enjoyed seeing the figures (they were very engaged in the staffing). That being said, Finance is responsible for auditing, so unless there is another taker, the Ops-execute / Finance-audit process seems appropriate.

Malak Kazan VP, Special Projects • January 23, 2014

I concur with Kerry. Based on the facts those closest to the "work", Ops, should be reviewing for time worked, time off; HR should review for any compensation changes related to increase, new hires etc. Also, seems like the data flow is "manual" to a certain degree and has caused some issues in the past and should consider investing in setting up an automatic feed from Time System/HRIS to Payroll. Hope this helps.

Mukhtar Nazir Head of HR • January 24, 2014

The way it should be set up: HR is responsible for payroll processing, disbursing and reporting, Finance only gets a figure which needs to be available in certain bank (s) for salary disbursement. If system is automated, GL codes get hit and salary get charged to the appropriate cost centers without reveling individuals' salary amounts.
It helps keeping employee data confidential within HR and Audit/Compliance departments.

Thomas Aiken Managing Partner • January 24, 2014

I recommend the following: Finance be responsible for processing the payroll, ensure proper accounting, and proper tax withholding/filings. HR responsible for reviewing any changes in compensation, hires, terminations. Operations reviews hours and costs. This establishes a segregation of duties to help protect against fraud. In other words, there are separate checks. Changes made by Finance to the payroll are reviewed and approved by HR, and Operations monitors charges to various cost centers.

Balbir Singh Prop. • January 26, 2014

I agree with Thomas, each function must execute its responsibility. HR has to sign off the compensation rates, operations has to confirm the hours and finance to finally execute correct payout in bank accounts with proper charge to appropriate cost centers.

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Who Should Sign Off On Payroll Reports?

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