The business owner is interested in payroll audit services because it will become clear whether the company’s activities comply with the laws of the Kenya. An objective independent assessment of wage operations will show how efficiently the costs of the enterprise are formed and whether the financial results of its activities meet the expectations of top officials of the organization.
Payroll audit services in Kenya

What’s a payroll audit?

A payroll audit is an analysis of a company’s payroll processes to ensure accuracy. Payroll audits examine things like the business’s active employees, pay rates, wages, and tax withholdings. You should conduct a payroll audit at least once per year to verify your process is up-to-date and legally compliant.

Generally, payroll audits are internal, meaning you or someone in your business conducts them. Performing internal audits can help you catch errors and prevent possible external audits later on.

After conducting the review, examine your payroll audit report. If necessary, make changes for future payroll processing. You may also need to retroactively make changes. For example, you might provide retroactive pay to an employee or remit more in taxes to the KRA.

Salary audit purpose

Salary is one of the main types of expenses of the organization. Errors in its calculation, for example, excessive additional charge, can lead to discontent from the tax authorities. Indeed, in this case it turns out that the income tax expense was overestimated, and, therefore, the organization did not pay income tax to the personal income tax budget.

In order not to force employees of the Federal Tax Service to come and independently verify the accuracy of the calculations and reporting, in all senses it is more profitable to get ahead of them and initiate an analysis of wages and thereby prevent all errors and subsequent losses. However, the point of a payroll audit services is not only that.

Salary and Payroll Audit Services Involves

Research and Assessment

Research and assessment of the impact of all components of the wage system on staff motivation

Verification

Verification of the validity and rationality of the use of various forms and methods of assessing employee labor.

Search for additional resources

The search for additional resources to increase labor productivity to achieve the strategic goals of the company.

Documentation Work

Fundamental work with documentation reflecting operations in accounting for accrual and payment of salaries.

Compliance Verification

Verification of compliance with legislation (labor, civil, tax);

Payroll Operations and Taxation

Establishing the degree of accuracy of accounting and taxation of payroll operations;

Payroll Audit Services Plan

Organization of the audit of remuneration begins with the preparation of the program and plan of control measures. Traditionally, our audit consists of three stages:

  1. Preparation of necessary documents
  2. Audit itself
  3. Generalization of the studied information and the creation of an audit report.

Salary in its socio-economic nature goes beyond the processes occurring within the company between management, staff and owners. Salary determines the position of the employee outside the organization, so the procedure for accruing and paying it is so carefully regulated at the legislative level.

According to the Civil Code, wages are considered as remuneration for labor, based on the qualifications of the employee, the complexity, quantity and quality of work performed by him. Therefore, checking payroll involves working not only with accounting and tax ledgers, but also with personnel documents. The audit report will include an assessment of the relationship of financial and non-financial documentation.

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Benefits of conducting a payroll audit

So, why should you conduct a payroll audit? The better question is, why shouldn’t you?

Conducting a payroll audit regularly can help you:

  • Prevent payroll fraud by weeding out ghost employees or mismarked time cards
  • Catch manual errors made when entering numbers into a system
  • Spot calculation mistakes if doing payroll by hand
  • Realize you need to factor in a raise
  • Remove terminated employees from your payroll
  • Verify your tax withholdings are accurate
  • Accurately account for paid or unpaid time off
  • Compare hours paid to when employees clocked in
  • Ensure you are compliant with employment laws (e.g., overtime pay)
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