Over reliance on systems

Over reliance on systems

Business, Payroll / eTorQue

In the past ten days users of Sage’s online accounting platform in South Africa have had a nightmare. The system has been down and they have had to scramble to issue invoices and get in SARS returns.

There is an important learning here for businesses and we see the same risk for many users of payroll software. Users have become accustomed to depending on their software both in terms of availability (uptime) and performance (accuracy).

Particularly in the payroll world we are facing increased complexity – legislation is added, but seldom simplified. Legislative authorities are also seldom considerate of the difficulties in changing systems, processes and user knowledge to deal with the legislation they enact.

This risk is increased in the payroll space because employers are often blissfully unaware of the hidden risks in payroll and, with the exception of payroll teams, seldom access their own payroll system.

We are increasingly seeing payroll software providers distancing themselves from the liability associated with incorrect payroll calculations.

This combination of increased complexity, low focus area and software developer risk aversion means it is critical employers put in place safeguards to protect themselves. We would recommend some of these alternatives:

  • Regular payroll reviews/audits;
  • Engaging practical partners to advise on key payroll aspects (including the tax aspects);
  • Entrenching good payroll practices and particularly good checking processes particularly with system changes
    • Legislative updates
    • New package items requiring system changes
    • Material changes to the workforce
    • Unusual transactions
    • Significant, material items e.g. bonus runs, provident fund/medical aid changes, retrenchments, engagements

For help with any of the above please feel free to contact us at [email protected]