Which payroll control requires the payroll schedule to be compared to budget and HMRC return before BACS is authorised?

Which payroll control requires the payroll schedule to be compared to budget and HMRC return before BACS is authorised?

• A. Timesheets
• B. Restricted access to records
• C. Segregation of duties
• D. Payroll schedule compared to budget and HMRC return before BACS authorised

Answer: (D)

Verifying and authorising payroll payments before they are sent through BACS is a preventive control that directly links the payout to planning and compliance. By requiring the payroll schedule to be compared with the budget and with the HMRC return before authorisation, the process ensures that the amounts, timing, and tax obligations are correct and align with what was planned. This early reconciliation helps detect variances, errors, or potential fraud before funds leave the organisation, reducing the risk of overpayments or non-compliance with tax reporting. Timesheets contribute data for payroll but don’t inherently ensure pre-payment validation against budget and tax returns. Restricted access to records and segregation of duties are important controls, but they address access and responsibility rather than the specific pre-payment reconciliation needed to authorise BACS.

Verifying and authorising payroll payments before they are sent through BACS is a preventive control that directly links the payout to planning and compliance. By requiring the payroll schedule to be compared with the budget and with the HMRC return before authorisation, the process ensures that the amounts, timing, and tax obligations are correct and align with what was planned. This early reconciliation helps detect variances, errors, or potential fraud before funds leave the organisation, reducing the risk of overpayments or non-compliance with tax reporting.

Timesheets contribute data for payroll but don’t inherently ensure pre-payment validation against budget and tax returns. Restricted access to records and segregation of duties are important controls, but they address access and responsibility rather than the specific pre-payment reconciliation needed to authorise BACS.