Our Blog

Internal Controls & Payroll

by Mary Stange – SJFS Client Advisor

We are continuing our review of the importance of internal controls in Parish, School & Ministry Finances for key processes. We would be remiss if we did not include a post regarding Payroll.

 

Diocesan Standards

 

It is important that, as an administrator, you are aware of any standards put forward by your diocese.

 

• Look for guidelines regarding Employer Contributions to Health Care.
  • In many cases, you can use this information when you are negotiating with a new recruit to show that while the pay rate might be less than they’ve had in the past, you are contributing quite a bit more to health care than previous employers may have been.
• What is the retirement match offered in your diocese?
  • This is another tool that can be useful with new recruits. So many young people do not understand the benefit of early contributions to retirement or the implications of an employer match. 
• Are there any salary guidelines from your diocese?
  • An example would be for Catholic Schools, some dioceses state that they are dedicated to paying a percentage of what is offered to teachers at the public schools in the area.
• Drawing attention to the benefits of working for a Catholic organization can be extremely helpful in employee retention.

 

Approving Salaries and Raises

• Any salaries or raises offered ought to be in adherence to standard policies that are clearly communicated to employees.
• Additionally, salaries and raises should be reviewed with your finance council ahead of time to ensure that you are meeting your fiscal goals. 
  • Any spreadsheets or review sheets seen by your finance council ought to be redacted, to ensure that they do not see any specific person’s wages.
    • It can be helpful to show the planned increase by GL Code.
    • This can enable you to also show the projected effects to Employer Contributions to Health Insurance, Retirement and Employer Payroll Taxes.
• This approval process gives you, as the administrator, the protection of an approved process if an employee wishes to understand the process or respectfully request an increase outside of the normal parameters.
  • You have the ability to say, “We can certainly have a discussion, but all final approvals to salaries go through an approval process with the Finance Council.”

 

Data Security

• With the sensitive information affiliated with payroll, it is important to have clear guidelines in place for the benefit of your payroll clerk as well as for the peace of mind of your employees.
• Does your payroll company offer electronic completion of the necessary documentation for payroll?
  • Electronic completion and PCI Compliant storage of payroll forms such as a W-4, Benefit Enrollment, or any additional necessary paperwork is the most effective way to safeguard your employees’ information.
  • If you are shopping for a new payroll company, look for one that contains an onboarding suite, which would enable you to capture this information electronically.
• Proper Storage of Paper Copies
  • If at all possible, paper copies ought to be scanned and stored on a PCI Compliant network along with a password protected digital folder. 
    • Access to these files should be limited to the administrator and the payroll clerk.
  • If paper is your only option, it would be wise to purchase a fireproof filing cabinet with a lock.
    • Records should be organized, and there should be a system in place to ensure all necessary start-paperwork is collected at the time of hire.
      • This will prevent any additional requests for missing documents down the road.
    • Access to this filing cabinet should be limited to the administrator and the payroll clerk.

 

Confidentiality

 

Confidentiality is a cornerstone of trust in both personal and professional relationships, embodying a philosophy that emphasizes respect for privacy and the ethical handling of information. At its core, confidentiality is about recognizing the intrinsic value of an individual’s personal data and the boundaries that govern its disclosure. By prioritizing confidentiality, we cultivate deeper connections, promote accountability, and encourage a culture of respect, ultimately enhancing the quality of interactions and the integrity of institutions.

 

Confidentiality in payroll information and pay rates is crucial for maintaining trust and integrity within an organization. Employees expect that their financial details, including salaries and bonuses, will be handled with the utmost discretion. Protecting this information not only fosters a sense of security among staff but also helps prevent potential conflicts or resentment that can arise from wage disparities. Organizations must implement robust data protection measures to ensure that sensitive payroll data is accessible only to authorized personnel. Additionally, clear policies should be in place regarding the sharing of pay information, emphasizing that discussions about salary should remain private. By prioritizing confidentiality in payroll practices, companies not only comply with legal requirements but also promote a culture of respect and transparency, which can enhance employee morale and loyalty.

 

When training a payroll clerk on confidentiality, it is important to stress that their interaction with payroll needs to be dispassionate. This training should also include dignifying the human experience of work. The dignity of work is a fundamental principle that underscores the value and worth of every individual’s labor, regardless of the role or industry. This concept emphasizes that work is not just a means to earn a living but a vital expression of human creativity, purpose, and contribution to society. The fundamental basis of the dignity of work begins with an organization’s clearly communicated regulations around payroll, wages, and increases.

 

The saying “comparison is the thief of joy” should resonate deeply throughout the training of a payroll clerk. In a social media driven world with constant connectivity, unrealistic expectations are often fueled. When we measure our lives against others—whether it’s their achievements, lifestyles, or appearances—we risk diminishing our own happiness and contentment. It is vital that a payroll clerk possess the professional maturity to shift their focus toward appreciating personal growth and the things that make each employee and their contributions