The issue
A very visible public company operating in a highly unionised environment began having trouble calculating its pension plan retirement payouts. Then, in connection with a payroll system change, payroll and expense checks of company senior executives were miscalculated. With the spotlight turned on them, the company’s payroll managers went on the defensive. In response, senior management decided to review the payroll system’s implementation and document all internal controls in the human resources and payroll functions.
Our approach
As the company's external auditor, PwC was called in to assist in internal control documentation and to make recommendations about improving the documentation process. We were also asked to investigate the errors that had occurred in calculating retirement payouts and payroll. In response, a member of PwC’s fraud risk and prevention group joined our audit team for purposes of fashioning control recommendations and data analysis tests for use in identifying evidence of fraud.
The outcome
Subsequently, our team provided the company with numerous avenues to pursue in terms of investigating suspicious activity. PwC also recommended several new fraud-related controls be built into the company’s business processes. Management now has a well controlled and effective payroll process — and one which is better protected from occurrences of fraud.
