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Payroll & HR Controls

I am working with a small accounting team that has only one HR and PR administrator.  She is responsible for everything from new hires, to benefits, terminations, status changes, to payroll processing and taxes.  I am curious how those of you in smaller organizations are managing the controls required when you have limited resources? Any help is appreciated.  


John Crooks
Title: Business Development Executive
Company: ExponentHR
(Business Development Executive, ExponentHR) |


I represent an HRIS service vendor but will offer you my experience in working with SMB companies for 10 years as an IBM consultant. Your issue is one of effective asset utilization. Depending on how many employees this company has limited administrative resources end up utilizing manual, redundant, paper driven, disparate processes to manage the initiatives you list. Many times a few administrators end up supporting anywhere from 20 to 100+ employees. While they may work efficiently and limit the degreee to whcih they engage employees over thephone, in person, or via email, this kind of work flow prevents them from doing more strategic or higher priority projects critical to maintaining operational and/or compliance requirements.

The key to fixing this is to seek a third party HRIS vendor that allows companies to standardize, simplify and automate HR domain processes and offers efficient, web-based employee self service engagment. There are many companies that offer this kind of scope for SMB firms but the price/benefit yield is significantly different.

Back to my original point. The optimal utilization of limited numbers of human resource assets across the entire enterprise is a function of how you can minimize their requirement to spend a disproportionate of their time(employees and managers) completing time and PTO reporting, payroll processing, benefit enrollment and related inquiries, and HR administration. Consolidated HR domain management functionality, employee self service, and an aggregated information repository are great enablers of increase employee productivity.

This is all part of what is evolving as collective and compelling business transformation. Hope that gives you perspective; perhaps more that you asked for!

Michael Jameson
Title: VP Finance
Company: Undisclosed
(VP Finance, Undisclosed) |

Only use automated tools with workflow approvals if available. Where they are not (like payroll, where a single person sets up employees and enters payroll), create automated reports for review by the CFO/VP Finance.

In the first case, automation with workflow, there are many tools out there for managing things like expense reimbursements, where the users enter the data, and then one or many folks can be in the signoff chain. This leaves HR out of the loop until it comes time to reimburse and all sign-offs have happened. This is a good thing.

For things like payroll, i have our payroll admin run payroll reports after initiating the pay batch. Then we compare that report (by dumping it into Excel) with an employee roster in Excel and see if anything doesn't match up.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

Management review/approval is a good compensating control for your separation of duties issue but may not be sufficient to minimize the risk of fraud, such as "ghost" employees. It would be better to realign duties within the organization to take HR out of Accounting and place it in the Executive Office or Administration. Accounting should only do the payroll piece.

Kenneth Evans CPA
Title: CPA
Company: Kenneth S Evans, CPA
(CPA, Kenneth S Evans, CPA) |

Hi Brenda,
I had a similar setup with a small publicly held telecom enterprise. We had a small headcount and were able to adequately & appropriately segregate HR & payroll by giving HR duties to an operations VP & I handled all payroll processing responsibilities. Very similar to what Ken Mason has mentioned.

As for third party providers, that is an option, but if headcounts are say less than 50 people, it might be most cost effective to keep it in house.

Scott Cadora
Title: Vice President
Company: Pinnacle Business Solutions, Inc.
LinkedIn Profile
(Vice President, Pinnacle Business Solutions, Inc.) |


With one employee administering both HR and payroll, your biggest risks are errors of commission and omission. The errors of commission are obvious where one employee has sole authority over writing and approving payroll. At the very least, I would suggest that you review each payroll and verify the pay data with your department heads to ensure accuracy.

The errors of omission are more difficult to discover and more dangerous. An inadvertent HR error can have significant consequences. If that the current administrator is not well versed in HR matters, then the question is not one of control, but rather what is that employee's knowledge of HR and what resources can your firm tap to find the right answers.

The complexity of HR varies depending upon your location, industry and employee demographics. Having an administrator with an HR certification can help you to develop and implement the HR policies to improve compliance with federal and state regulations and to run a better shop for all employees. However, certification is not required so long as your administrator can tap into the proper resources for guidance. There are many such HR resources ranging from consultants to service firms that administer the entire HR function. The key is to find someone that can help your firm to develop a comprehensive HR policy, keep that policy up-to-date and to be an ongoing resource to answer questions and resolve situations that arise during the course of business.

Running payroll in-house is expensive with much greater risk for mistakes. Payroll is now a commodity service and should be outsourced to improve efficiency, accuracy and costs. You no longer have to choose between the big two firms. Many firms including banks, software providers and HRIS firms offer advanced payroll services that are relatively inexpensive yet are robust enough for the needs of most small businesses. You can enter, review and approve payroll, taxes and reports in a matter of minutes and then download the data directly into your general ledger software. The paychecks, direct deposits, taxes and reports are all filed automatically so it seems inefficient for an employee to be dedicated to this task, beyond the initial steps of entering data and reviewing the payroll data.

I hope this information is helpful for you.

Helen Dow
Title: Controller
Company: Goodwill Industries of Central Virginia
(Controller, Goodwill Industries of Central Virginia) |

If they use a service such as ADP, Ceridian, etc., there are three areas of control that can still be put in place to provide good controls against fraud and errors.

First is adds, terms and changes require documented manager approval.

Second, PR person should never receive envelope containing completed payroll; open, review and distribution of checks/stubs should be by a "reviewer" (next level up - Controller or Accounting Manager).

Third, payroll services have a "change report" that shows all changes for each payroll. This shows every change and add. This report should be reviewed each pay period by the same reviewer.

If there isn't an external payroll service such as ADP used, I would only recommend segregation of the HR and PR functions with a third next level up reviewer.


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