Payroll, being one of the highest overhead expenses of a company, requires effective management to ensure that this expense is correctly translated into the income statement and is risk free. Yet we find that companies fail to invest in high level resources to manage their payroll.

 

Management continuously looks to see how departments can reduce costs and at the same time increase operational efficiency. South African Payroll and HR systems are world-class and incorporate excellent automation tools and, if implemented effectively, can empower payroll professionals to achieve more and help instil a highly reliable and controlled HR/Payroll environment. Nevertheless, it is the standard of the payroll professional and the efficiency of the payroll processes that make all the difference to this environment.

 

Payroll Professionals play a unique role in an organisation as they are required to possess a diverse set of qualities which include mathematical ability, analytical skills, software and payroll legislation knowledge. On top of this, a good Payroll Professional will have a solid understanding of governance, risk management and internal control.

 

In addition they must be trustworthy, be able to keep matters confidential, be honest, approachable, responsive, helpful and communicative. The South African Payroll Association (SAPA) plays a huge role in uplifting the standards of the payroll environment, with the goal to creating this as a culture and making it the mantra of the payroll professional.

 

A payroll team needs to be customer focused and be able to provide service that is designed to meet the needs of the business and provide value. It is important that the payroll department forms a strategic partnership with HR and integration of the HR department with the payroll process can certainly drive value-add to an organisation.

 

In becoming a professional body, the South African Payroll Association has embarked on a journey. This is a journey that is defined by the central objective to ensure that the payroll professional is recognised as a competent, knowledgeable asset with insight and understanding of various disciplines to ensure the implementation of legislation, company policy and all other relevant influences. It is also focused on the aim to ensure that the professional remains informed of all changes in legislation and other factors which would directly or indirectly impact on the payroll. 

 

This is achieved through continuous professional development (CPD) activities, a requirement which has to be met by each professional if they are to retain their professional designation.  

More information on the professional designations and the requirements thereof can be found on the Payroll Association website, www.sapayroll.co.za.

 

We recognise that there is a scarcity of talented, hardworking and dedicated payroll personnel and that valuable employees need to be encouraged, motivated and awarded the prestige they deserve.

 

Risk

Companies are likely to expose themselves to financial risk by not employing the correct level of person to do the job. State of the art HR/Payroll systems will not completely eliminate a company’s risks if there is a lack of payroll and legislative knowledge within payroll environment and where compliance aspects are lacking.

 

The South African Revenue Service (SARS) is continuously improving their systems and constantly changing the employee’s tax world through legislative amendments which require total compliance from Employers.

 

In 2010 SARS introduced entirely new elements including new mandatory fields relating to both employers’ and employees’ demographic details (i.e. personal information such as your name and date of birth).

 

This is an integral part on the Personal Income Tax process and all employers are legally required to supply the mandatory information to SARS. It is the employee’s responsibility to ensure that any change to their personal status is provided to the employer. This is a major challenge to employers to maintain an accurate and up-to-date employee record. Hence payrolls need to integrate with HR to create an effective process to obtain and update the HR/Payroll systems to comply and to ensure data integrity.

 

South Africa is possibly the most highly unionised country in the world, with strict labour laws protecting employee rights and hence entrenching job security. Since the introduction of the current Labour Relations Act of 1995 and the formation of the CCMA, almost 15 years ago, employee protection in the labour field has become entrenched and mandatory for South African employers.   To ensure that companies incur minimal financial risk, it is imperative for payroll professionals to fully understand the laws governing payroll administration and one important act is the BCEA. There could be serious IR consequences for an organisation that has incorrect calculations of overtime, leave pay etc.

 

SAPA realise that it is critical for the payroll professional to keep abreast of legislative requirements governing payroll administration and therefore provides regular workshops and tax updates in this regard.

 

Fraud

Payroll Fraud in South Africa is at extremely high levels. Even where there is no intent to commit fraud, evolving tax and labour laws often see payroll administrators unwittingly exposing companies to penalties for non-compliance or illegal practice and costly administration mistakes. Lack of processes and segregation of duties, ineffective checking and reconciliation are considered major fraud threats within a payroll environment.

 

SAPA believes that the key to eliminating the unintentional risk is for the payroll professional to have knowledge of payroll best practice and procedures. Training of the payroll professional is of utmost importance to be effective and lower risks in payroll.

 

Audit

In addition every company needs to incorporate a comprehensive payroll audit program in risk management planning. Auditors must not only review processes and controls but include detailed data analytics audits which will highlight payroll non-compliance and fraudulent entries. It is important to engage with your auditors and ensure that the audit committee sees this as an important risk area that must be included in an annual audit program.

 

Other requirements for payroll administration

Benefits fund administration and payroll accounting reconciliation’s have become a function of high importance that falls within the portfolio of the payroll department in most large organisations. In recent times, more cases of the maladministration of retirement funds by retirement fund administrators have been making news. Employers should integrate reconciliation tools that make it easy to reconcile deductions made from employee’s salaries to post allocation of fund administrator’s data. It should become compulsory for fund administrators to provide the detail data allocated to employees, to employers to reconcile back to payroll deductions. This adds value to employees to ensure that the correct allocations into their respective funds are made.

 

Membership key to strengthen industry

SAPA urges all executives across South Africa to encourage their payroll personnel to become members of the Association.

 

More specifically, the organisation would like to highlight the value of its annual conferences. These are of an exceptionally high standard and help to create awareness of the many issues impacting payroll administration today.

 

The SAPA workshops are designed to provide the training needed in the payroll environment.

 

With this in mind, the Association is excited to announce details of the SAPA Conference 2013

 

This year’s event is scheduled for Cape Town on 27th of August, in Durban on 29th of August and in Johannesburg on 3^rd & 4^th September.

 

The Conference will be themed Payroll on Broadway and will focus on the organisation’s first ever Awards to celebrate winners in the industry. The journey of payroll will also be under the spotlight at this year's event.

 

National payroll week will be celebrated during the week of the awards and Payrolls are encouraged to submit their stories to the South African Payroll Association.

 

For more information on the Conference and to book, click through to www.sapayroll.co.za