The CFO asks you to strengthen payroll controls before the statutory audit. What controls would you put in place?
What the interviewer wants to hear
- Segregation of duties between master data, processing and approval
- Maker-checker for master data and bank detail changes with documentation
- Monthly reconciliations: headcount, variance, payroll to GL, statutory payments
- Access reviews and audit trails in the payroll system
- Evidence retention and periodic internal audit sampling
Model answer
I would start with segregation of duties: one person maintains master data, another processes, and a manager outside processing approves and releases payments. Any change to salary or bank details must go through maker-checker approval with supporting documents, such as an approved increment letter or a bank change form verified with the employee. Each month I would perform and file reconciliations: headcount with HR, month-on-month variance with explanations, payroll register to general ledger, and statutory payments to challans and returns for PF, ESI, PT and TDS. In the system, I would review user access every quarter, remove leavers, and keep the audit trail switched on. I would also check exit dates against final pay, to avoid paying leavers. Finally, I would keep evidence in a structured folder by month, so auditors can sample quickly, and do my own sample checks before they arrive.
Can you answer it under time pressure?
Take a timed hard round and get scored on every answer.
More hard Payroll Specialist questions
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- Management wants to restructure salaries so that basic becomes a larger share of CTC. How would you analyse the impact before rollout?