All About Payroll Audit

As an employer, you’re responsible to process employee’s payroll in compliance with the Holidays Act 2003. Most of the time, businesses’ non-compliance relates to incorrect calculations of the minimum employee leave entitlements.

This article explains what a payroll audit is and how one is carried out.

Payments and calculations for leave and entitlements must be processed in a manner that’s compliant with the Holidays Act. Annual leave, bereavement leave, alternate holidays and public holidays mustn’t be underpaid. Employment contracts cannot override the minimum employee leave entitlements under any circumstances.

Non-compliance with the act can create a real nightmare for businesses as they will be required to supply a huge list of payroll information, some of which may be difficult to find. Employers can even face prosecution in extreme cases. Other repercussions of noncompliance include expensive legal fees, interest, fines and a potential banning order to prevent a person or entity from acting as an employer for up to 10 years.

New Zealand payroll software companies do their best to stay compliant with the act, however, NZ’s Holiday Act legislation is among the most complicated in the world, and therefore it’s a very difficult task. Internal payroll administrators face the same challenges and often don’t have adequate knowledge of the legislation to keep your business compliant either.

Surprisingly, there is no set standard or certification in NZ for payroll. The government has not provided businesses with a blueprint on what being compliant looks like. Therefore, software providers’ automated calculations are often incorrect, putting your business at risk of substantial liability.

To find out if your payroll is right, talk to us today about our Payroll Auditing and Consulting Services

What Is a Payroll Audit?

A payroll (Holidays Act 2003) Audit is a process that assesses your business’s compliance with the Act. An audit can be conducted by an independent payroll specialist with the appropriate payroll qualifications, or by a Labour Inspectorate representing the MBIE (Ministry of Business Innovation & Employment). Audits can be proactive or reactive (either targeted investigations or following a complaint, commonly by an employee or ex-employee). Besides, it is noteworthy that audits are carried out to review leave entitlements and correct holiday pay accrual, which is the key reason people and businesses seek payroll audits.

Complaints and Targeted Investigations

During an investigation following a complaint, Labour Inspectors have the authority to enter a business address at any time of day, interview anyone at the workplace and demand copies of employee wage and time records. If you don’t produce what is being requested, the inspector can take action against you and issue penalties.

Proactive Audits

This is where we come in. Voluntary audits are requested by businesses who want to be proactive and mitigate the risk of non-compliance. Often these companies are simply wanting to get their payroll right for both themselves and their employees. Contact us today to keep your business safe

If you’re wanting an audit completed for your business, you’ll need to provide us with your employee timesheet, payroll and employee contract information. The information required will be clearly outlined in our very own payroll audit checklist which we’ll provide. You’ll also be able to upload supporting documentation.

Take a look at this Payroll Audit Checklist, which will give you an idea of what information you’ll need to provide for any payroll audit.

Once the audit is completed you’ll be provided with a comprehensive report which will tell you any areas of concern as well as the actions required to correct any breach. We’ll also assist you with anything you’re not sure about.

Let’s get your payroll sorted now so you’re on top of it from here on in.

Talk to us about how we can support you and your business.