PAYROLL CHAPTER 6

6 SECURITY AND CONTROL

6.1 INTRODUCTION

All information held on the payroll is highly confidential and must be kept secure.

The information is highly sensitive as most employees will not know what other employees are paid, or what the salary scales of more senior employees are.

Other information is personal to the employee, such as whether the employee has joined the staff pension scheme, or contributes to charities through the payroll giving scheme, along with personal data such as bank account details and home address.

6.2 PRESERVING CONFIDENTIALITY

The steps that should be taken to preserve confidentiality include:

  • •not discussing an employee's pay details with another employee
  • •not leaving documents containing personal data about an employee open and available for others to read, including open files on a computer
  • •not leaving computers unattended during processing of the payroll
  • •putting files, papers and discs away in locked cupboards, or in the payroll department to which unauthorised personnel do not have access
  • •not allowing or enabling access to payroll files to unauthorised personnel.

6.3 SECURITY

Processing the payroll results in significant sums of cash paid being to employees and outside agencies.

Where notes and coins is involved for wages paid in cash, it must be kept in a safe between the time it is collected from the bank, the time when wage packets are prepared, and the subsequent distribution of the wage packets. It is advisable for the wage packets to be prepared in a locked room if possible. Certainly, access to unauthorised personnel should be denied during this period. Payment of wages in cash is now less common than it used to be.

If payments of wages and salaries are made by bank transfer, or by cheque, the cheque book and transfer details must similarly be retained in a secure place.

6.4 THE ROLE OF THE PERSONNEL DEPARTMENT

The main responsibilities of the personnel department are:

(a)the recruitment of new employees
(b)preparing records of the employees' personal details
(c)updating records of the employees' personal details
(d)maintaining any other records relating to the employees, such as:
  • (i)records of absences, and the reasons
  • (ii)details of pay reviews
  • (iii)notes of progress or appraisal meetings
  • (iv)training records.

In some cases the personnel department will also be responsible for processing the payroll. In other words, the payroll function will be one part of the personnel department. More often, the two functions are separate, but there is a certain amount of overlap. For example, the personnel department will keep details of an employee's rate of pay and hours of work, and contributions (if any) to the company pension scheme. These details are also needed by the payroll department.

The separation between personnel and payroll is useful in maintaining controls over the payroll as it enables records to be compared:

•to ensure that employees who have left the business are no longer being paid
•to highlight whether 'dummy employees' have been invented by employees in payroll department as a way of committing fraud.

Controls applied within payroll aim to ensure that employees are correctly paid the right amount at the right time and with correct deductions. Proper authorisation and checking provides much of that control.