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Canadian HR Reporter, a Thomson Reuters business 2019
News Canadian Payroll Reporter
Employers unprepared for payroll audits
Understanding the process is vital for compensation professionals: Survey
BY SHEILA BRAWN
IS YOUR payroll department
ready for an audit? Do you know
what information to provide and
where to find it?
A recent survey by Angus Reid
Forum for the Canadian Payroll
Association (CPA) found that
54 per cent of business leaders
would not know how to prepare
for a payroll audit. Among those
who are directly responsible for
payroll, 66 per cent said they
would not know.
The survey also found that
close to 70 per cent of business
leaders were unaware of or did
not think about the potential for
a payroll audit.
This is despite the fact that
many different types of agencies
conduct payroll audits.
They include the Canada Rev-
enue Agency (CRA), Revenu
Québec, employment standards
boards, workers' compensation
bodies, and provincial finance
ministries that levy employer
health taxes.
Peter Tzanetakis, president of
the CPA, said the association did
not expect that such a high per-
centage of employers would be
unaware of payroll audits.
"To us, that is extremely sur-
prising, given the potential for
an audit and the potential for
penalties and the stigma that is
associated with non-compli-
ance," he said.
"One of our intentions (in
doing the survey) was to draw
attention to the fact that ap-
proximately 48,000 businesses
across Canada are reviewed just
by the CRA alone on an annual
basis and they dole out just un-
der $30 million in penalties," said
Tzanetakis.
"I think (an audit) is something
that whether you are the payroll
practitioner or the CFO or the
CEO, you need to be aware of."
For payroll professionals, in
particular, it is vital to know
what payroll audits are and how
to prepare for them, said Sheena
Graves, senior manager payroll
delivery at Ceridian Canada.
"It is important for payroll
professionals to understand the
payroll audit process simply be-
cause they are often the front-
line resource working with the
auditor and responding to their
inquiries," said Graves.
"In addition, understanding
the audit process can help to en-
sure that all necessary records
are being kept for the appropri-
ate period and that they are orga-
nized and stored in the most ef-
ficient way to reduce additional
effort and time the payroll team
will need to set aside for an au-
dit," she said.
"While individual auditors
may approach employers differ-
ently, there are general rules of
engagement," said Graves.
"Payroll professionals that
understand their role are bet-
ter positioned to represent their
organization."
When a government agency
contacts an employer to set up
a payroll audit, it will normally
provide a list of documents that
the auditor will want to see when
they arrive for the audit.
"The documentation can
include payroll input and out-
put, manager sign-off, variance
reasons, payment dates and
the processing schedules," said
Graves.
The type of information may
depend on which agency is con-
ducting the audit.
see PREPARE page 8