Why Auditing the Payroll Cycle is Important
You don’t hear a lot about large-scale financial statement frauds involving payroll accounts, as accrued payroll liabilities aren’t typically material to a company’s financial position. But fraud involving the payroll cycle is quite common. Here are 6 examples of payroll fraud:
• Paying fictitious employees
• Paying terminated employees
• Overpaying actual employees
• Incorrectly classifying labor costs
• Underpaying third parties
• Inaccurate disclosures for executive and/or shared-based compensation
To reduce the likelihood of fraud, companies should ensure that:
• Payment is made to actual employees at authorized rates for actual time worked
• Gross pay, payroll deductions, and net pay have been correctly calculated
• Payroll deductions have been authorized
• Payroll costs are correctly classified
• Withholdings are submitted to third parties in a timely manner
• Full disclosure is made for any executive and/or share-based compensation
0:00 Introduction
0:29 Paying fictitious employees
1:11 Paying terminated employees
1:49 Overpaying actual employees
2:25 Incorrect classification of labor costs
2:58 Underpaying third parties
3:39 Inaccurate disclosures
4:15 What companies need to ensure
6:26 The 6 steps for auditing the payroll cycle
—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
http://eepurl.com/dIaa5z
—
SUPPORT EDSPIRA ON PATREON
* / prof_mclaughlin
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
Apple Podcasts: https://podcasts.apple.com/us/podcast...
Spotify: https://open.spotify.com/show/4WaNTqV...
Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
/ prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
Facebook: / edspira
Instagram: / edspiradotcom
LinkedIn: / edspira
—
CONNECT WITH MICHAEL
Twitter: / prof_mclaughlin
LinkedIn: / prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
https://www.edspira.com/about/
https://michaelmclaughlin.com
