Payroll Audit Preparation: Compliance Framework for 2025
Strategic framework for preparing payroll systems for audit, including documentation requirements, control testing, and compliance verification processes.
Payroll audit preparation has become increasingly important for finance directors in 2025, with HMRC and internal auditors focusing on payroll compliance, accuracy, and controls. Establishing robust audit preparation processes ensures smooth audit execution and demonstrates effective governance.
Documentation Requirements
Effective audit preparation requires comprehensive documentation of payroll processes, controls, and transactions. Finance directors should ensure payroll documentation is current, accessible, and demonstrates compliance with regulatory requirements and internal policies.
Key documentation includes payroll procedures, control descriptions, reconciliation records, and evidence of compliance activities. Finance directors should maintain documentation in a structured format that facilitates audit review and demonstrates process effectiveness.
Control Testing
Auditors will test payroll controls to verify their effectiveness in ensuring accuracy and compliance. Finance directors should conduct pre-audit control testing to identify and address weaknesses before external audit, reducing audit findings and demonstrating proactive management.
Compliance Verification
Audit preparation should include verification of compliance with RTI requirements, auto-enrolment obligations, and statutory pay entitlements. Finance directors should conduct compliance reviews and address any identified issues before audit commencement.
Conclusion
Effective payroll audit preparation in 2025 requires comprehensive documentation, control testing, and compliance verification. Finance directors who invest in robust preparation processes will ensure smooth audits and demonstrate effective payroll governance.