Time is never on your side when completing an audit and when it includes the payroll, the challenge is even greater. Reviewing a company’s payroll is one of the most demanding aspects of an annual audit, most especially because of all the variables involved. Exacerbating an already difficult task is the fact that each client’s payroll is different and every March brings new tax changes from SARS.
Sandra Swanepoel, sales director of Softline VIP says that auditors and accountants are constantly challenged to audit the software as well as stay on top of payroll legislation. “The dilemma is that audit clerks are tax experts, but are not payroll specialists and because of its complexity, an auditor could take several days to become familiar the payroll system.”
Swanepoel says that it is not just PAYE that is an issue, but UIF, occupational injury levy, skills development levy, medical aid scheme contributions and the Basic Conditions of Employment Act (BCEA). She says that one way to assist audit clerks is through specialised training. “This shortens the audit process and saves costs. If the audit clerk understands the software the process becomes easier.”
Topics covered in this specialist training include an overview of the different software packages and the various add-on modules available; payroll legislation and how earnings and deductions influence tax calculations. Swanepoel says the training does not only cover calculating tax, but also looks at other factors that influence tax such as time worked and tax deductable deductions when an employee is paid.
“The one area almost all clients struggle with is leave so it is important that audit clerks understand this complex calculation and how it is done based on the BCEA leave process. Audit clerks will also gain a better understanding of how leave provisions will influence the company’s payroll cost,” says Swanepoel.
To further assist, she says audit clerks can use a comprehensive tax screen, which will help with the process. “It adds value because it clarifies payroll queries with regards to tax and provides peace of mind.”
A detailed explanation of the payroll process is also covered within the training to ensure accountants and auditors have a thorough understanding of how a payroll system works. The training also highlights possible areas of risk and focuses on standard reports that can assist the auditor and accountant to analyse the data.
Swanepoel says these training courses are in line with audit and accounting firms need for Continuing Professional Development (CPD) and counts towards accumulating CPD points.
“A payroll is most often the largest cost in a company and as a result the place where cash is most likely to come adrift. Having the necessary skills to audit a payroll system is thus vital to all involved,” concludes Swanepoel.