Payroll Audit Checklist
Financial audits expose truth – make sure yours tells the right story. This Payroll Audit Checklist transforms nerve-wracking examinations into confident presentations of fiscal responsibility. Built from real audit experiences, it covers what auditors actually check, not what textbooks suggest. From documentation to testing procedures, get the systematic approach that passes scrutiny.
Payroll System Setup
□ Payroll system configured correctly
□ Company information accurate
□ Tax IDs verified
□ Bank accounts confirmed
□ Pay schedules established
□ Earnings codes defined
□ Deduction codes set up
□ Tax tables current
□ GL mapping correct
□ Security roles defined
□ Audit trails enabled
□ Backup procedures active
Employee Master Data
□ Employee records complete
□ Personal information accurate
□ Tax withholding forms current
□ Direct deposit information verified
□ Pay rates authorized
□ Deductions documented
□ Benefits enrollment accurate
□ Time tracking assignments correct
□ Department codes accurate
□ Job titles current
□ Status changes processed
□ Termination dates recorded
Time & Attendance
□ Time tracking system functioning
□ Time cards/sheets approved
□ Overtime calculated correctly
□ Shift differentials applied
□ Holiday pay accurate
□ PTO tracked properly
□ Leave balances correct
□ Absence reporting complete
□ Time adjustments documented
□ Approval workflow followed
□ Exception reports reviewed
□ Documentation maintained
Payroll Processing
□ Processing schedule followed
□ Time data imported correctly
□ Calculations accurate
□ Gross pay verified
□ Deductions calculated properly
□ Net pay correct
□ Tax withholdings accurate
□ Garnishments processed
□ Manual checks documented
□ Void checks controlled
□ Adjustments approved
□ Reports reviewed
Tax Compliance
□ Federal taxes calculated correctly
□ State taxes accurate
□ Local taxes applied
□ FICA withholdings correct
□ Medicare calculations accurate
□ Tax deposits timely
□ Quarterly returns filed
□ Year-end forms prepared
□ W-2s issued timely
□ 1099s processed
□ Tax notices addressed
□ Compliance maintained
Benefits & Deductions
□ Benefits deductions accurate
□ 401(k) contributions correct
□ Employer matches calculated
□ Insurance premiums current
□ Garnishment calculations correct
□ Union dues processed
□ Voluntary deductions authorized
□ Pre/post tax classifications correct
□ Benefit changes processed timely
□ Reconciliations performed
□ Vendor payments accurate
□ Documentation complete
Payroll Distribution
□ Direct deposits processed
□ Pay cards loaded
□ Physical checks secured
□ Check stock controlled
□ Signature authority proper
□ Distribution documented
□ Unclaimed wages handled
□ Stop payments processed
□ Reissued checks tracked
□ Escheatment compliant
□ Documentation maintained
□ Security preserved
Reconciliation & Reporting
□ Payroll register reviewed
□ GL reconciliation performed
□ Bank reconciliation completed
□ Tax liability reconciled
□ Benefits reconciled
□ Quarter-end reconciliations done
□ Year-end reconciliations complete
□ Variance analysis performed
□ Exception reports reviewed
□ Management reports prepared
□ Audit reports available
□ Documentation filed
Compliance & Controls
□ Segregation of duties enforced
□ Authorization controls active
□ System access restricted
□ Change controls followed
□ Documentation requirements met
□ Retention policies followed
□ Privacy protected
□ Audit trails reviewed
□ Internal controls tested
□ Compliance verified
□ Policies followed
□ Procedures current
Special Payments
□ Bonuses calculated correctly
□ Commissions accurate
□ Severance payments proper
□ Final paychecks compliant
□ Expense reimbursements processed
□ Relocation payments handled
□ Stock compensation tracked
□ Imputed income calculated
□ Grossed-up payments correct
□ International payments compliant
□ Documentation complete
□ Approvals obtained
Audit Trail & Documentation
□ System audit trails active
□ Changes documented
□ Approvals retained
□ Supporting documentation filed
□ Reconciliations documented
□ Error corrections tracked
□ Adjustments explained
□ Reports archived
□ Retention schedule followed
□ Access logs reviewed
□ Security incidents documented
□ Compliance documented
Post-Audit Actions
□ Findings documented
□ Root causes identified
□ Corrective actions planned
□ Process improvements identified
□ Training needs assessed
□ System enhancements considered
□ Controls strengthened
□ Procedures updated
□ Follow-up scheduled
□ Management informed
□ Remediation tracked
□ Success measured
How the Payroll Audit Checklist works
Input your organization type, fiscal year, and applicable regulations. Specify audit scope and any prior findings. The AI generates a comprehensive payroll audit checklist with pre-audit preparation, documentation requirements, and testing procedures. Each item includes timing, responsible parties, and evidence formats auditors expect. Track remediation items and create audit-ready packages.
Failed audits trigger investigations, damage reputations, and freeze funding. Most failures aren’t fraud – they’re poor preparation. This checklist ensures you have what auditors need, when they need it, in the format they expect. It’s the difference between confident compliance and scrambling for documents. Professional firms prepare systematically – now you can too.
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