Payroll Audit: Over/ underpayment to staffs

In payroll audit - auditor need to be cautious and maintain high level of professional skepticism - as payroll is a sensitive area. Payroll has implication on the Company's cost, as well as individual's payment. In certain circumstances, employee union or industry union is also stakeholder.

There could be instances where by there would be over payment or under payment to employee - and this may not be identified by the reviewer of the monthly payroll costs nor the employee. Hence, it is important not only ensure that the payroll costs stated in the payroll summary is correct. Auditor should also test the details within the payroll summary. This is especially true for individual not withdrawing full monthy salary for various reasons, for instance:

- new joiner who joins during the month;
- resignee who leave during the month;
- employee took unpaid leave during the month
- part time employee who were paid based on the number of days work

The computation of the payroll costs for different scenario should be cross-checked against the employment contract to test that correct details have been captured. There could be huge consequences for over payment and/or under payment for payroll costs.