• Financial loss through invalid or unauthorised payments including fraudulent ones
• Low morale because of failure to make payments promptly
• Inaccurate payments start dissatisfaction and potential financial loss through delays or errors in payroll records
• Censure or fines by the tax authorities because of incorrect calculation or payments

• There should be written authorisation to employ or dismiss any employee, in accordance with the organisation’s procedures and legal requirements.
• Changes in rates of pay should be authorised in writing by a senior member of staff not involved with the payroll.
• Overtime worked should be authorised by a senior member of staff not involved with the payroll.
• An independent member of staff should check the payroll and sign it.
• The wages cheque should be signed by two signatories and checked against the payroll entry.
• Where pay relates to hours at work, some form of time recording should be used.
• Direct bank transfers should also be signed and checked regularly against details on personnel files.
• When an employee has been absent for a significant period, their entitlement to salary should be checked against personnel details.
• Personnel records should be kept for each employee, giving details of engagement, retirement, dismissal or resignation, rates of pay, holidays etc with a specimen signature of the employee.

Wherever possible, employees should be paid either by cheque or direct into their bank accounts. However, where the employees are paid in cash there are a number of specific control procedures:

• Employees should sign for their wages.
• No employee should be allowed to take the wages of another employee.
• The system should preferably allow the wages to be checked by the employee before the packet is opened by using specially designed wage packets.
• The employee making up the pay packets should not be the employee who prepares the payroll.
• Normal petty cash controls should apply.

• Unused cheques should be held in a secure place.
• The person who prepares cheques should have no responsibility over purchase ledger or income ledger.
• Cheques should be signed only when evidence of a properly approved transaction is available. This evidence might be invoices, payroll, petty cashbook and so on.
• In a large concern, those approving the original document should be independent of those signing cheques.
• Check signatories should be restricted to the minimum practical number.
• Two signatories at least should be required, except perhaps cheques of small amount.
• The signing of blank cheques and cheques in favour of the signatory should be prohibited.
• The cheques should be crossed before being signed.
• Supporting documents should be cancelled as soon as they have been paid, to prevent their use to support further cheque payments.
• Cheques should preferably be dispatched immediately; if not they should be held in a safe place.

• Bank reconciliations should be prepared at least monthly.
• The person responsible for preparation should be independent of the receipts and payments function, or alternatively, an independent person should check the reconciliation.
• If the reconciliation is prepared by independent person, he or she should obtain bank statements directly from the bank and hold them until the reconciliation is completed.
• The preparation should preferably include a check of at least a sample of receipts and payments against items on the bank statement.