Payroll professionals need to have high ethical standards to protect personal identifiable information and provide the best service to employees, a payroll professional said May 13.
Employees rely on payroll departments to distribute wages punctually and make proper deductions, said Ronald Moser, a payroll and employee benefits consultant for Taxing Matters. They also depend on payroll departments reporting their wages accurately to the federal government because that affects the amount of benefits they receive, he said.
“A person’s paycheck is very personal to them,” he said. “75% of Americans live paycheck to paycheck. So that check is really important, and the accuracy of that check is going to be important. So ethics in payroll is really important.”
Payroll departments should develop their own code of ethics and ethics statement so payroll professionals understand their ethical obligations to employees and the company, he added. Ethical codes can unite a diverse payroll workforce by making them adhere to one set of ethical principles and standards.
“Individuals have their own moral principles and their own individual ideas in regards to what their ethics are going to be,” he said. “In this diverse workforce, which is getting more diverse day by day, we have different sets of ethical standards, some more extreme than others. And it’s something we have to be aware of going forward.”
Checks and Balances
Payroll departments should create a flowchart for their processes and include a system of checks and balances that are reviewed on a regular basis, Moser said at the American Payroll Association’s 40th Payroll Congress in Las Vegas. The chart will help payroll professionals maintain compliance with state and federal rules and regulations.
“Yes, it’s about getting the correct amount of wages and getting paychecks out on time, but it’s also about the business of being in compliance,” he said.
Payroll departments have access to employees’ confidential information, such as Social Security numbers, addresses, and their salaries, he added. Payroll professionals must maintain integrity and confidentiality to prevent that information from being publicized. Incorporating checks and balances can keep an employee’s personally identifiable information secure within the organization, he said.
Giving employees specific payroll duties is a practical way for payroll departments to implement checks and balances, Moser said. Segregating duties creates consistency, improves quality, and can prevent conflicts of interest, he said.
“In some environments, it is hard to segregate duties in one or two-person payroll offices,” he said. “Make sure you have good internal controls. You have an internal auditor, an external auditor, and make sure they are looking at things. Invite these people in. It will maintain your integrity.”
Payroll offices should communicate with their company’s human resources department to ensure that they have the same ethical standards, Moser said. Employees often contact payroll professionals with problems that HR departments should be addressing, he said.
“You have to make it a safe environment for employees to come to us,” he said. “Make sure there is a clear open-door policy.”
Employees trust payroll professionals because they are knowledgeable and reliable, he added. Payroll departments do not understand how much companies and employees rely on and appreciate their work because payroll professionals are usually only contacted when something goes wrong, he said.
“Payroll has a lack of recognition,” he said. “If you build good ethical practices and procedures and trust and integrity, you will be recognized.”