Written By Phil Vivirito
Bond Beebe
P: 301.272.6090 E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

We recently performed a payroll audit of an employer that prepared its contribution reports electronically from its payroll.  Each month the employer queried the payroll and pulled out all the required information for contributions; this was the case for the entire audit period.  During the pre-audit interview between the employer and the auditor, it was determined that all the correct hour types were being programmed to be reported.  The auditor tested these hours, new hires, the completeness of the bargaining unit, and found no problems.  The last test the auditor did was a horizontal test; taking an employee and checking hours for each week of the audit period.  This test discovered hours missing in August 2008.  The auditor checked another employee and found the same issue;  the hours omitted for each employee were greater than a week but less than two weeks.

The auditor informed the employer of the discrepancy, and the employer was surprised as everything was done electronically.  The employer went over the process with the auditor: each month a query is run and the data downloaded.  The problem was that the query was input each month by the payroll clerk.  In August 2008, instead of typing 8/1/08-8/31/08 to run the query, the clerk typed in 8/10/08-8/31/08, inadvertently omitting nine days by starting with the 10th instead of the 1st.  With over 250 employees, it turned out to be a sizable finding.  The problem was not with the program, but turned out to be old-fashioned human error.

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