It’s worth avoiding these common mistakes when it comes to running payroll across multiple jurisdictions, especially those with more complex regulatory frameworks:
For many multinational companies, subsidiaries operating in some markets may not adhere to the same payroll standards as the company HQ – lacking the typical business controls, checks and approvals. This is often due to a lack of infrastructure and global systems, with local compliance frequently relying on spreadsheets, for example, which eliminates auditability and accountability. It pays to have consistent global policies and processes in place that apply to all payroll operations.
Similarly, not having access to adequate global systems is one of the biggest barriers to effective global payroll management. From a payroll compliance perspective, having a consolidated view across payroll processing in every country is invaluable, particularly if it offers full visibility of payroll processing activities, performance and consolidated reporting.
Unchecked electronic fund transfers (EFTs) present a serious fraud risk. A lack of regular audits or procedures to oversee payment authorisations can not only make it difficult to determine true employment costs, it can also expose the company to corrupt practices.
Some employee ‘business expenses’ can also have tax implications. These need to be carefully monitored to ensure compliance and to guarantee that any reimbursements are correctly allocated, with the correct tax paid.
The use of petty cash to cover ad hoc operational expenses, or even wages, can be particularly risky from an auditing and compliance point of view.