Payroll Administration and Systems
Administration questions focus on controls, records, and system integrity. Payroll must maintain accurate employee master data, pay rates, tax elections, deduction authorizations, and bank information. Strong internal controls include segregation of duties (the person who enters new hires should not also approve payroll), approval workflows, audit trails, reconciliation of payroll registers to the general ledger, and exception reporting for unusual hours or pay.
Know recordkeeping basics: FLSA payroll records generally three years; tax records generally four years after the tax is due or paid; I-9 retention is three years after hire or one year after termination, whichever is later. Trap: “keep everything seven years” is not a universal payroll rule. Also know direct deposit authorization requirements and pay card disclosures; employees must be able to access wages conveniently.
Year-end work includes reconciling W-2s to payroll registers, verifying taxable wages, handling voided checks, and meeting filing deadlines. System conversions require parallel testing and reconciliation. Trap: an off-cycle payroll can change deposit timing and quarter-to-date totals.
Rule of thumb: every payroll change should have a source document, an approver, and an audit trail. Reconcile the payroll register to the general ledger and to tax deposits before closing the period.