Audit

Meaning & Definition

An audit of an organization involves careful examination and evaluation of the organization’s data, documents, and processes related to Human Resources (HR), such as pay records, authentication forms, payroll processing, attendance records, policies, and rules that must be adhered to by the organization. The purpose of auditing is not only to verify accuracy but also to comply with legislated requirements at both the company and Indian law levels. A thorough audit helps to find weaknesses, risks, and areas for improvement.

Significance of audit:

• Identifies the laws and rules that govern HR and Payroll.
• Identifies Early Error and Risk and Process Gaps.
• Improve the Accuracy of Data and Internal Controls.
• Cultivate Trust with Employees, Management, and Regulators.
• They Support Improved Governance and Adherence to Policies.

Legal & Regulatory Considerations:

Payroll and HR audit functions address compliance with several laws, including

• Shops and Establishment Acts (applicable in each State)
• Wages and Payments Act 1936
• Employees’ Provident Fund and Miscellaneous Provisions Act 1952
• Employees’ State Insurance Act 1948
• Income Tax Act 1961 (Tax Deducted at Source for Salary)

In addition to statutory audits, many organisations will perform an internal audit per company policy.