COVID-19 Impact on Payroll and Payroll Fraud
Author: Lynn Fountain
||1 hour for CPAs
The quick onset of the COVID-19 Pandemic has resulted in organizations trying to react quickly to government and legislative mandates for all aspects of operations. This reaction has caused many complications and logistical issues in many areas including adequate preparation and management of payroll. Personnel and payroll are critical to all businesses. The payroll process includes a multitude of factors including pay rates, employee classification, sick leave, paid time off, withholdings, taxing, benefit plans and other elements that impact workers.
On March 18, 2020, President Trump signed the Families First Coronavirus Response Act into law, authorizing certain relief to employees and small and midsize businesses pertaining to the COVID-19 pandemic. On March 27, the CARES Act was signed in to law providing a 2 trillion dollar relief package.
The March 18 Act is intended to help the U.S. supply businesses and tax-exempt organizations with less than 500 employees with sufficient funds to provide employees with paid leave mandated taken in connection with the pandemic related to employees’ health condition or to provide care for family members. The funds are taken through tax credits.
In addition to legislative issues, companies must pro-actively manage all aspects of their payroll process from managing exempt and non-exempt personnel, to layoffs and furloughs, to paid benefits and taxing issues. The payroll process is one considered “inherently” at high risk for fraud. In this time of crisis, companies will need to be pro-active with their internal controls surrounding this process.
Publication Date: April 2020
Tax practitioners, Payroll personnel, Small business owners, CFO’s and controllers.
- Payroll Fraud
- COVID Payroll Fraud Risks
- Internal Controls
- Payroll Tax Background
- Emergency Aid Package
- Payroll Process
- Identify areas of the payroll process that should be closely managed and monitored while being able to effectively continue to execute the process with minimal impact and an eye towards strong internal controls and preventative fraud measures
- Recognize how to examine areas to instill strong internal controls and preventative fraud measures
- Describe background of FICA, Medicare and unemployment taxes
- Identify federal aid programs
- Recognize how to outline conditions for loan forgiveness under the PPP
NASBA Field of Study
Accounting (1 hour)