| VOLUME: IV |
POLICIES RELATED TO PAYROLL ADMINISTRATION |
| SUBJECT: |
Segregation of Duties for Payroll Processing |
| SOURCE: |
Financial Management Services |
| DATE ISSUED: |
October 1993; Revised April 2004; Revised July 2007 |
| POLICY NO.: |
IV-200 |
| RATIONALE: |
To establish when segregation of payroll duties is required in order to minimize fraud from occurring due to processing, auditing, or verification of payroll and custody of payroll checks.
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| POLICY: |
Staff who process payroll for the university should not be in a position to audit or verify payroll, or receive the payroll checks for distribution to employees. Specifically, any employee who is a fiscal officer or fiscal approver should not have access to process payroll for his/her unit.
Fiscal officers who have expenditures for salary and wages should review the processing of payroll in their departments to ensure that all individuals who process the payroll are not in a position to audit or verify payroll, or receive a payroll check other than their own.
Smaller organizations that do not have the number of staff needed to segregate the duties must coordinate with their Responsibility Center fiscal officer in order to work through an option that would add fiscal controls to the process.
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| DEFINITIONS: |
An organization is a unit that operates as one entity, and for the purpose of this policy has one central processing area for payroll functions. The organization could be a department, responsibility center or campus.
Payroll processing is having update access to the HRMS payroll voucher, and using this access to modify and approve payroll using the HRMS payroll voucher.
Auditing or verifying payroll is the function of reviewing what occurred on the payroll by reviewing the Fiscal Approval Voucher Audit Report prior to payday. This review should at a minimum include:
- scanning the names of those paid to look for people who have been terminated or not hired,
- scanning the amounts paid to people to make sure they look reasonable in amount, and;
- reviewing hours worked to validate that they are reasonable hours for the person doing the job.
The auditing or verifying payroll function should be performed by either the fiscal officer or the fiscal approver. (The fiscal officer will be fiscal approver if no delegate is chosen).
The fiscal officer has the responsibility for all payroll expenditures that occur on his/her accounts. The fiscal officer can delegate approval authority to the fiscal approver who then is authorized to have approval authority on all HRMS financial transactions, or the fiscal officer can retain the role of the fiscal approver.
This approval delegation also assigns authority to the fiscal approver to perform the auditing and verification functions for the fiscal officer. However the fiscal officer always has final responsibility for those functions being completed on an accurate and timely basis. |
| CROSS REFERENCE: |
See Accounting Administration Policy I-30, Fiscal Misconduct;
See Payroll Policies IV-1, Time Reporting for Non-Exempt Employees,
IV-260, Delegation of Signature Authority for HRMS Transactions
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| RESPONSIBLE ORGANIZATION: |
Financial Management Services |
