Internal Control Checklist/Questionaire/Assessment On Human Resources & Personnel Expenditure

July 2nd, 2009 Comments off
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Using the salient points below, perhaps you can establish an internal control questionnaire/checklist for your company’s human resources and personnel expenditure.

1.0 General

  • Policies and procedures for HR management such as recruiting, termination and turnover management should be clearly documented and communicated.

2.0  Planning and Policy

  • An annual manpower budget that addresses the organisation’s future workforce needs and anticipates organisation changes (i.e. structure, services, processes and new technology) should be complied with by the HR department.
  • Salary structure and incentive compensation programs should be reviewed annually and quarterly respectively to ensure that they are fully competitive with the marketplace.
  • Changes made to incentive compensation and employee fringe benefit programs must be approved by Group MD/FD.
  • All employees should be covered under group medical insurance in accordance with the local conditions and practices.

  • A formal system of appraisal and counselling should be established whereby:

All employees are formerly evaluated and counselled at least once a year; – Supervisors and managers are given appropriate training in counselling and evaluation techniques.

A training policy and program for staff should be in place.

  • An updated copy of Employees’ Handbook should be given to all permanent employees. The contents to be included should be as follows:

– Employment contract terms and conditions

– Health and safety regulations

– Disciplinary actions

3.0  Recruitment

  • There should be a clear and defined recruitment process in place to attract the highest quality of employees.

4.0 Termination and Resignation of Employees

  • There should be clear and defined termination process in place.
  • Exit interviews should be conducted by HR department for all employees who resigned.
  • All items and equipment belonging to the organisation should be returned by resigned employee.
  • An exit clearance checklist should be completed for all resigned employees.

5.0 Payroll

  • Individual files should be maintained for every employee containing:

– Contract of employment
– Latest salary rate
– Updated personal particulars

  • Access to employee files and payroll system should be restricted to authorised personnel.

  • Prescribed forms should be used for:

– Adding employees to the payroll
– Deleting employees from the payroll (via letter of resignation)
– Changing important payroll information such as bank account number
– Changing employees’ salary scale
– Changing employee-authorised deductions

  • Such forms should be approved in accordance with the DOA prior to processing.
  • Amendments made to payroll masterfile should be automatically generated for approval.
  • Monthly payroll reports should be reviewed by the head of HR Approval must be obtained from two senior management staff (e.g. two General Managers, or one Finance Manager and one General Manager) before payment of the payroll.

6.0  Reconciliation

  • Payroll summary should be reconciled to the actual amount paid per bank statement monthly. Payroll summary prepared by HR should be based on payroll records.

7.0  Travel and Entertainment

  • Travel and entertainment claim policies should be clearly documented and communicated. These should include:

– Airline class
– Hotel grade
– Allowable expenses and claims limit
– Documentation requirements
– Approval requirements

  • Prescribed forms for entertainment claim should include the following:

– Purpose of entertainment
– Company employees included
– Persons entertained
– Designation of persons entertained

  • No employee should be able to approve his/her own expense claim. Any expense claims by both the Managers and Directors should be approved by the next higher level of management authority.

7.0  Segregation of duties

  • There should be segregation of duties between the following functions:

– Human Resource
– Payroll

8.0  Delegation of Authority (DOA)

  • The documented DOA should cover the authority to:

– Approve salary and salary-related changes
– Approve expense claims
– Hire, terminate, promote, transfer of employees
– Travel and entertainment expenses
– Approve changes to payroll master-file

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Financial Accounting

 
 

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