By Adrienne Silla | Head of Advisory, Australian Payroll Association
When people think of the Australian Payroll Association (APA), they often think of membership, training and the resources we provide to help payroll professionals develop their knowledge and skills. But there is another part of APA that many people are less familiar with: our Advisory team.
We work with organisations to review their payroll operations, assess compliance risks and identify issues that may otherwise go undetected. And we do this with a team of consultants who have worked in operational payroll, not just people who understand the theory behind it.
That distinction matters because payroll compliance is rarely just about looking at a policy, checking a report or reviewing a sample of transactions. The detail matters and sometimes the problem is hidden in the way a single pay code has been configured.
A general review can be useful for identifying broad risks, but a payroll-specific compliance review needs to go deeper. It requires an understanding of how industrial instruments translate into payroll rules, how those rules are configured in a system and how the resulting payments are treated for tax and superannuation purposes.
At APA, our consultants understand payroll from the operational side. They know that an entitlement needs to be interpreted correctly, configured accurately, processed consistently and reported appropriately. They also understand how a small configuration issue can be repeated across hundreds of employees and thousands of pay runs. Our compliance reviews can include a clause-by-clause assessment of the applicable Modern Awards and Enterprise Agreements, checking how the requirements have been translated into payroll practices and system settings. We examine the detail rather than simply reviewing the overall process and assuming everything underneath it is working correctly. We also review individual pay codes to assess their treatment for Single Touch Payroll (STP) reporting, superannuation, PAYG withholding and other relevant requirements, including whether the code has been configured and used appropriately. This matters because getting one part of payroll right does not necessarily mean the whole payment is correct.
I recently came across an example that illustrates why payroll expertise is so important.
A business had engaged an accounting firm to conduct a superannuation review. Following that review, the organisation believed it was compliant with its superannuation obligations. However, when we examined the payroll arrangements, we identified an issue with the way public holiday payments had been configured.
The relevant pay code was paying ordinary time plus a 1.50 overtime component. The accounting firm's review had considered the superannuation treatment of the payment based on its overtime classification. In that respect, the classification being reviewed was not the underlying problem. The issue was that the payment itself was not being calculated correctly. Under the applicable pay rules in this example, the employee should have received double time and a half as a public holiday penalty rate, rather than ordinary time plus an overtime component. That distinction mattered because the correct public holiday payment was subject to superannuation. As a result, the business had been underpaying superannuation on public holiday payments.
The accounting review had examined the superannuation treatment of the payment presented to it, but the underlying payroll calculation had not been identified as incorrect. The problem was not simply whether superannuation had been applied to a particular payment classification. It was whether the employee had been paid correctly in the first place. This is exactly why payroll compliance needs to be considered as a connected process. The pay rule, the calculation, the pay code and the superannuation treatment all need to work together.
The example above reflects the particular instrument and payroll arrangements involved. Public holiday penalty rates and superannuation treatment depend on the applicable terms and circumstances.
Accountants, HR professionals and lawyers all play important roles in an organisation's compliance framework. Accountants bring financial and taxation expertise, HR professionals understand employment practices and employee arrangements, and lawyers provide legal interpretation and advice. But payroll sits at the intersection of these areas, translating obligations into the actual amounts paid and reported to employees and government agencies.
A clause may be interpreted correctly from a legal perspective, but the payroll configuration may not reflect it. A superannuation review may correctly assess the treatment of a payment as it appears in the system while missing the fact that the payment itself has been calculated incorrectly. A payroll report may balance perfectly, even though the wrong rate has been applied. These are the details that an experienced payroll consultant knows to investigate.
The question is not whether other professionals can contribute to payroll compliance. They absolutely can. The question is whether the review includes someone with the specialist payroll knowledge needed to test how the rules actually operate in practice.
Every organisation has different risks depending on its workforce, industrial instruments, payroll systems and internal processes. An independent payroll review can help establish whether the arrangements are working as intended and where further investigation may be needed.
Depending on the scope, APA Advisory can help organisations:
Review Modern Awards and Enterprise Agreements clause by clause.
Pay-rule interpretation.
Examine pay codes and system configuration, including penalties, overtime, allowances and leave payments.
Check STP reporting, superannuation and PAYG withholding treatment.
Identify potential underpayments, overpayments and recurring payroll errors.
Recommend practical improvements to controls, processes and payroll governance.
The objective is not simply to find errors. It is to understand why they occurred, assess the potential impact and help the organisation put the right controls in place to prevent them from happening again.
If you know APA for our membership and training, I encourage you to get to know our Advisory team as well.
We bring practical, operational payroll experience to the detail of payroll compliance. We look beyond whether the process appears to be working and examine whether employees are being paid correctly, entitlements are being interpreted properly and payroll systems are configured to support compliance. Because a payroll system can process a payment exactly as it has been instructed to. That does not mean the payment is right.
Payroll deserves to be reviewed by people who understand payroll.
If your organisation has not had a detailed, independent payroll compliance review, contact APA Advisory to discuss how we can help you understand your risks and strengthen your payroll compliance framework.