Auditing Human Resources and Payroll

Introduction

People costs are often the largest single expense in an organisation, and human resources and payroll processes carry significant risks of error, fraud, non-compliance and unfair treatment. Ghost employees, unauthorised pay changes, incorrect allowances, poor leaver controls and weak data protection are recurring findings in audits across all sectors.

This Auditing Human Resources and Payroll training course equips auditors to plan and perform effective, risk-based reviews of the full employee life cycle. Participants learn how to audit recruitment, onboarding, payroll calculation, allowances and overtime, leave and absence, performance and reward, and termination, as well as compliance with employment and tax obligations.

The course places strong emphasis on data analytics, showing how to use payroll and HR data to identify anomalies, test controls and focus audit effort where the risk is greatest.

Course Objectives

By the end of this training course, participants will be able to:

• Identify the key risks across HR and payroll processes
• Plan a risk-based audit of human resources and payroll
• Audit recruitment, onboarding and employee master data controls
• Test payroll calculation, approval and payment controls
• Review allowances, overtime, benefits and leave management
• Audit leaver processes and final settlements
• Use data analytics to detect payroll anomalies and fraud
• Report findings and recommend practical improvements

Target Audience

This training course is suitable for a wide range of professionals, including:

• Internal auditors and audit managers
• HR and payroll managers
• Finance and controllership professionals
• Compliance and risk professionals
• Fraud examiners and investigators
• External auditors reviewing payroll

Training Methodology

The course is practical and data-driven. Participants work with sample HR and payroll datasets to perform analytical tests, review sample personnel files and payroll reports, map processes and identify control gaps. Case studies illustrate real payroll fraud schemes and how they were detected.

Target Competencies

• HR and payroll risk assessment
• Employee life cycle auditing
• Payroll control testing
• Payroll data analytics
• Fraud red flag detection
• Audit reporting

Day One: HR and Payroll Risks and Audit Planning

• The employee life cycle and associated risks
• Common HR and payroll control failures and audit findings
• Regulatory, tax and employment law considerations in overview
• Understanding HR and payroll systems and interfaces
• Risk assessment and scoping of an HR and payroll audit
• Data requests and preparing for analytics
• Exercise: building a risk and control matrix

Day Two: Recruitment, Onboarding and Master Data

• Workforce planning and approved headcount controls
• Recruitment process integrity and conflicts of interest
• Pre-employment checks and documentation
• Employee master data creation and change controls
• Segregation of duties between HR and payroll
• Personnel file completeness and data protection
• Exercise: testing master data changes

Day Three: Payroll Processing and Payment

• Payroll calendar, inputs and cut-off controls
• Calculation of basic pay, deductions and taxes
• Payroll review, reconciliation and approval
• Bank file creation and payment security
• Payroll accounting and general ledger reconciliation
• Outsourced payroll provider controls
• Exercise: reviewing a payroll reconciliation

Day Four: Allowances, Overtime, Leave and Leavers

• Allowances and benefits eligibility and approval
• Overtime authorisation and reasonableness testing
• Leave and absence recording and accruals
• Performance-related pay and bonus controls
• Leaver notification and timely removal from payroll
• Final settlements and end-of-service calculations
• Case study: an overtime and allowance fraud

Day Five: Payroll Analytics and Reporting

• Analytics to detect ghost employees and duplicates
• Comparing bank details, addresses and identifiers
• Identifying unusual pay changes and exceptions
• Visualising payroll trends for audit insight
• Writing persuasive HR and payroll audit findings
• Agreeing management actions and follow-up
• Personal action plan for HR and payroll auditing