Quick answer: Before completing monthly payroll, an employer should verify employee status, working time, salary changes, leave, bonuses, deductions and termination payments; calculate payroll obligations; reconcile the payroll register with employment documents, bank payments and accounting records; and retain evidence of approval and payment.
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Why Is Payroll More Than a Salary Calculation?
Payroll connects employment documents, working-time data, accounting entries, bank payments and statutory obligations. A change made by HR can affect the amount calculated by the accountant, while an accounting or payment error can create an employee dispute or inaccurate financial records.
A reliable process therefore uses a fixed cut-off date, a documented approval chain and a reconciliation after payment. The employer should also be able to explain how each amount in the payroll register was calculated.
What Should Be Checked Before Payroll Is Calculated?
The payroll preparer should receive confirmed information rather than informal or incomplete instructions. The monthly input checklist should cover:
- new hires and effective employment dates;
- salary amendments and changes to working conditions;
- attendance, working time and approved absences;
- annual leave and relevant leave payments;
- sick leave information and supporting documents;
- bonuses, commissions and other variable payments;
- business-trip and reimbursable expense information;
- authorized deductions;
- terminations and final settlements;
- changes to bank details or personal employee data.
Each change should be supported by an appropriate document and approved by the responsible person. This reduces the risk of relying on messages that cannot later be verified.
A Practical Monthly Payroll Workflow
- Lock the input data: Set a cut-off date and confirm that HR information is complete.
- Calculate gross amounts: Record salary, leave, bonuses and any other approved remuneration.
- Apply relevant deductions and obligations: Calculate the amounts applicable to the employee and employer based on the current rules and the employee’s circumstances.
- Review exceptions: Compare the result with the previous month and investigate material changes.
- Obtain approval: Provide an approval summary without disclosing payroll information to unauthorized persons.
- Prepare payment information: Ensure that the approved net payroll corresponds with the bank payment file or payment instruction.
- Post accounting entries: Record salary expense, liabilities, deductions and payments in the accounting system.
What Should Be Reconciled After Payroll?
The monthly payroll should agree across four records: the employment documentation, payroll register, bank payment and general ledger. A reconciliation should identify unpaid salaries, rejected bank transfers, unusual deductions, duplicate payments and differences between calculated liabilities and accounting balances.
