Improving the accounting and auditing of payroll calculations

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The study is devoted to the methodological foundations of accounting and audit of settlements with employees. The organization of accounting and audit of agreements with employees at Ukrainian enterprises is studied, and ways to improve the accounting of settlements with employees and cases of erroneous accounting, as well as the lack of internal audit are identified.

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International Journal of Management (IJM) Volume 11, Issue 5, May 2020, pp. 307-319, Article ID: IJM_11_05_030 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=5 Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 DOI: 10.34218/IJM.11.5.2020.030 © IAEME Publication Scopus Indexed IMPROVING THE ACCOUNTING AND AUDITING OF PAYROLL CALCULATIONS Valentyna Panasyuk Department of Accounting and Taxation, Ternopil National Economic University, Ternopil, Ukraine Mariya Lalakulych Department of Accounting, Uzhgorod Trade and Economic Institute of Kyiv National University of Trade and Economics, Uzhhorod, Ukraine Erika Yuhas Department of Accounting, Uzhgorod Trade and Economic Institute of Kyiv National University of Trade and Economics, Uzhhorod, Ukraine Lesya Rybakova Uzhgorod Trade and Economic Institute of Kyiv National University of Trade and Economics, Uzhhorod, Ukraine Vitaliy Bobrivets Department of Economic Expertise and Business Audit, Ternopil National Economic University, Ternopil, Ukraine ABSTRACT The study is devoted to the methodological foundations of accounting and audit of settlements with employees. The organization of accounting and audit of agreements with employees at Ukrainian enterprises is studied, and ways to improve the accounting of settlements with employees and cases of erroneous accounting, as well as the lack of internal audit are identified. On the example of two real enterprises, the authors demonstrated how to improve and refine: proposed to use CLN contracts, proposed a schedule of primary accounting documents, analytical sub-accounts and an audit program for payroll. Key words: Accounting, Auditing, CLN Contract, Payroll, Wages Cite this Article: Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets, Improving the Accounting and Auditing of Payroll Calculations. International Journal of Management, 11 (5), 2020, pp. 307-319. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=5 http://www.iaeme.com/IJM/index.asp 307 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets 1. INTRODUCTION To function successfully in a market economy, the company must have a type of economic behaviour that would adapt to dynamic environmental conditions. At the same time, a unique role is played by the use of effective methods of labour management, which would ensure the interest of employees in highly productive work and improve the results of the enterprise. At the present stage, the primary means of forming such an interest is wages, which reflects the quantity and quality of labour expended by the employee [1-4]. The problem of organizing settlements with employees at the enterprise is one of the most acute because in decline in sales, reduction in the number of employees there are changes in the organization of labour and its payment [5-7]. That is why the problem of improving payroll calculations is relevant. The issues that remain controversial include the organization of accounting for deductions and deductions from employees' salaries, automation of settlements with staff. Many scholars [8-12] have dealt with this issue, and there are many sources for defining the concept of wages, its types and taxation. Still, the task of our study is to study the problems of accounting and auditing of payroll calculations in real enterprises and offer recommendations to help improve it and avoid penalties for improper accounting. 2. IDENTIFYING AREAS FOR POSSIBLE IMPROVEMENT OF ACCOUNTING AND AUDIT OF PAYROLL CALCULATIONS The analysis of accounting for settlements with employees at Ukrainian enterprises revealed several cases of incorrect settlements with employees: 1. At the enterprise "Techinmash" PJSC (Ternopil) there is an hourly wage – 25.13 UAH / hour. If the month is less than the norm of working hours in hours, the company pays such workers a minimum wage – 4173.00 UAH. Thus, additional losses of the enterprise can amount to UAH 4,147.87 in 2019. 2. In January 2020, a new department was established at "Aparan" LLC (Uzhhorod), the head of which, by prior agreement, does not receive a salary, but only interest in sales. There were no sales in January and February, so nothing was charged to the manager. This is wrong because there is a constitutionally guaranteed remuneration for work, as well as the requirements of the Labour Code of Ukraine and the Law of Ukraine "On Remuneration of Labour". From 02.02.2020, fines for violations of labour legislation and wages increased. Thus, for such a breach of labour legislation, the company will incur, first, an administrative penalty – from 1700 UAH; secondly, financial sanctions – from 1 (from 01.01.2020 it is 4723 UAH) to 10 minimum salaries (it is 47230 UAH). The company does not conduct an audit of settlements with employees, and it would be able to identify the above cases on time to enable the company to correct errors on time. 3. RESULTS AND DISCUSSION 3.1. Accounting and Auditing of Payroll Calculations for "Techinmash" PJSC For "Techinmash" PJSC we suggest two ways out of the situation: a) pay for work only within the hours worked. The laws on the State Budget for the respective year determine the minimum wage in monthly and time amounts. In 2020, it is set at UAH 4723.00. and UAH 28.31. in accordance. When the employee's work is paid by the hour, the reference point for compliance with the minimum wage is the minimum wage in the amount set by the Law on the State Budget for the year; this is stated in the letter of the Ministry of Social Policy of Ukraine dated 21.02.17 № 242/0/102-17/282: for employees who have monthly salaries with the norm of a month, the minimum state guarantee in remuneration is http://www.iaeme.com/IJM/index.asp 308 editor@iaeme.com
Improving the Accounting and Auditing of Payroll Calculations the minimum wage in the monthly amount, and for employees with hourly wages – the minimum wage in the amount of time. Thus, if the hourly wage of an employee is UAH 28.31 / hour, then the requirement for the level of the minimum wage is met, and the amount of the minimum wage in the monthly amount is not taken into account in payments. However, in the collection of a single social contribution in all cases, you need to focus on the minimum wage in the monthly amount – 4723.00 UAH. Thus, Part 5 of Article 8 of the Law of Ukraine "On Collection and Accounting of the Single Contribution for Compulsory State Social Insurance" dated 08.07.10 № 2464-VI provides: if the basis for accrual of the single contribution does not exceed the amount of the minimum wage, established by law for the month for which the income is received, the amount of the contribution is calculated as the product of the minimum wage, determined by law for the month for the income (profit), and the single contribution rate (except for cases specified, for example, in the SFSU letter of 29.01.16 № 1394/5/99-99.17-03-03-1). So, in cases where the working time is less than 166 works hours and, as a result, the amount of salary for the month may be less than 4723.00 UAH, you need to add a single contribution to the minimum tax base. b) to build relationships with such employees on another legal basis, in particular, it is possible to perform work under contracts of civil law nature. CLN is concluded in writing and contains information about the description of the work that the contractor undertakes to perform to the customer, the timing of these works, as well as the terms of their payment. Under the CLN contract, the executor (contractor) does not obey the rules of internal labour regulations, he organizes his work and performs it at his own risk. A natural person who has entered into a CLN contract is not included in the customer's staff. It is not covered by the guarantees and benefits established by labour legislation. Under the CLN contract, it is not the work process that is paid for, but its results. Hourly wages cannot be applied to CLN contracts. The results of work under the CLN contracts are determined after the end of the work and formalized by acts of acceptance-delivery of the performed works (rendered services), based on which their payment is made. However, the CLN contract may provide for advance (or phased) remuneration. When performing works (services) under the CLN agreements, no entries are made in the contractor's employment record book. At the same time, the law does not prohibit the conclusion of contracts of a civil nature between the company and its employees from performing work or providing services in free time from the main work under the employment contract, i.e. in free time; other employees can also tell guests about the sights architecture. In particular, the Ministry of Labour and Social Policy of Ukraine in its letter of August 6, 2004, № 18-429 clarifies that the employer may enter into a contract with its employee who is on regular leave for the period of leave for the employee to perform certain work. In practice, the most commonly used two types of contracts under the Civil Code of Ukraine, under which individuals can be involved in the work of both legal entities and individuals. This is a contract and a contract for the provision of services, but we are interested in the latter. Consider in more detail the procedure for concluding this contract for the provision of services to understand its differences from the employment contract. The concept of a contract for the provision of services and the procedure for its application are defined by the Central Committee of Ukraine (Chapter 63). Under the contract for the provision of services following Article 901 of the Civil Code of Ukraine, one party (performer) undertakes on behalf of the other party (customer) to provide a http://www.iaeme.com/IJM/index.asp 309 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets service consumed in the course of a certain action or activity. The customer undertakes to pay the contractor unless otherwise provided by the contract. The contractor must provide the service in person. In cases established by the contract, the contractor has the right to entrust the performance of the contract for the provision of services to another person, remaining fully liable to the customer for breach of contract. If the contract provides for the provision of services for a fee, the customer is obliged to pay for the service provided to him in the amount, on time and in the manner prescribed by this contract. The term of the contract for the provision of services is set by agreement of the parties unless otherwise provided by law or other regulations. Losses caused to the customer by non- performance, or improper performance of the contract for the provision of services for a fee shall be reimbursed by the contractor, in the presence of his fault, in full, unless otherwise provided by the contract. The contract for the provision of services may be terminated, in particular through unilateral withdrawal from the contract, in the manner and on the grounds established by the Central Committee of Ukraine, another law or by agreement of the parties. The procedure and consequences of termination of the contract for the provision of services are determined by agreement of the parties or by law. Despite some similarities between the contract and the service contract, the main difference between them is that under the service contract the result of work is usually not transferred to the customer, because the service provided under such a contract is inseparable from the process of its provision (such as excursion services, services for the protection of the object or own protection, services for legal support of the activity of a certain subject, services for cleaning of the premises or territory, etc.). The difference between a civil contract and an employment contract. Sometimes the nature and procedure of certain works (in particular, the provision of services) resemble the functional responsibilities of the employee under the employment contract, which, in turn, makes it difficult in practice to distinguish between civil and employment contracts, and often generates in this regard, disputes between the parties. Since the conclusion of an employment contract and a contract of a civil nature have different legal consequences, the latter should be distinguished from employment contracts on certain grounds (Table 1). Table 1 Differences between the employment contract and the contract of a civil law nature Contract of a civil law nature (contract or Employment contract provision of services) Legislative regulation of relations The employment contract is concluded following The contract (provision of services) is the Labor Code of Ukraine and regulations adopted concluded following the provisions of the on its basis Civil Code of Ukraine The concept of contract CLN contract is an agreement between two or more parties aimed at establishing, changing An employment contract is an agreement between or terminating civil rights and obligations as an employee and an employer under which the defined (Art. 626 of the CCU). Under the employee undertakes to perform the work specified contract, one party (contractor) undertakes to in this agreement, subject to internal labour perform specific work at the risk of the other regulations, and the employer undertakes to pay the party (customer), and the customer undertakes employee wages and provide working conditions to accept and pay for the work performed (Art. necessary for work provided by law labour, 837 of the CCU). Under the contract for the collective agreement and agreement of the parties provision of services, one party (performer) (Art. 21 of the LCU). undertakes on behalf of the other party (customer) to provide a service that is consumed in the process of performing a http://www.iaeme.com/IJM/index.asp 310 editor@iaeme.com
Improving the Accounting and Auditing of Payroll Calculations specific action or carrying out certain activities, and the customer undertakes to pay the contractor (Art. 901 of the CCU). The scope of the contract The subject of the employment contract is the Under a CLN contract, the subject of the labour process, i.e., the employee performs a contract is the final result, i.e. the performance specific job function in a particular speciality, by the contractor/executor of the agreed work qualification, position, usually without achieving aimed at achieving the final result. any result. The term of the contract A contract or provision of services may not be An employment contract can be: indefinite, concluded for an indefinite period, as the concluded for an indefinite period; for a specified performance of a particular job is conditioned period set by agreement of the parties; such that is by a specific time of its production. Therefore, concluded at the time of performance of individual in such contracts, as a rule, by agreement of work. In this case, a fixed-term employment the parties, the terms of performance of work contract is concluded in cases where the or its separate stages are established. If the employment relationship can not be established for contract does not set such deadlines, the an indefinite period, taking into account the nature contractor must perform the job, and the of subsequent work, or conditions of its customer has the right to demand its implementation, or the interests of the employee performance within a reasonable time, which and in other cases provided by law (Art. 23 of the would correspond to the nature of the LCU). obligation, nature and scope of work and practice of business relations (p. 2 of Art. 846 of the CCU). Conditions and procedure for work The employee must perform the task assigned to him personally and has no right to delegate its performance to another person, except as provided The contractor has the right unless otherwise by law (Art. 30 of the LCU). At the same time, he provided by contract, to involve third parties must also work honestly and conscientiously, (subcontractors) in the performance of work, timely and accurately comply with the instructions while remaining responsible to the customer of the employer, comply with labour and for the result of their work (Art. 838 of the technological discipline, the requirements of CCU). Under the service agreement, the regulations on labour protection, treat the property contractor must provide the service in person. with care (Art. 139 of the LCU). In turn, the But, in the cases established by the contract, employer must properly organize the work of the executor has the right to put the workers, create conditions for productivity growth, performance of the contract on another person, ensure labour and production discipline, strictly remaining responsible before the customer in comply with labour laws and labour protection full for breach of the contract (Art. 902 of the rules, pay attention to the needs and demands of CCU). workers, improve their working and living conditions (Art. 141 of the LCU). Remuneration The amount of wages depends on the complexity and conditions of work performed, professional and business qualities of the employee, the results of his work and economic activity of the enterprise and may not be less than the minimum wage established The amount, procedure and terms of payment by law. Wages are paid to employees regularly on of remuneration for work performed (services working days within the time limits set by the provided) are determined by the parties and collective agreement or regulatory act of the specified in the contract and do not depend on employer, agreed with the elected body of the the amount of the minimum wage. primary trade union, but at least twice a month for a period not exceeding 16 calendar days and not later than seven days after the end of the period for which the payment is made (Article 115 of the LCU). http://www.iaeme.com/IJM/index.asp 311 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets The above list of differences between the employment contract and contracts of a civil nature, under which citizens can be involved in work, is not exhaustive. Understanding the legal nature of these types of agreements, their proper application - the key to avoiding possible misunderstandings and disputes between the parties. According to court practice, contractors or contractors who did not understand the consequences of concluding these contracts often go to court to refuse leave, pay for temporary incapacity for work, make entries in the employment record book, etc. In some cases, the court satisfies such claims by recognizing the concluded employment contracts, if, during the consideration of the case in court, they establish appropriate evidence that the relationship had signs of labour. Therefore, it is necessary to avoid such situations in which the relationship between the parties to the CLN contract can be regarded as labour:  the owner acquainted the employee with the working conditions against a receipt;  in the agreement of civil law nature, it is specified that the executor has to adhere to industrial discipline, safety measures, fire safety;  the executor undertook to comply with the rules of internal labour regulations;  with the executor, whose services are related to the storage or maintenance of tangible assets, entered into an agreement on full liability, issued an order stating the amount of remuneration;  the name of the executor is in the timesheet, and he was regularly paid wages and so on. The conclusion of a document called an "employment agreement" does not always indicate that the relationship between the contractor and the owner was of a civil nature. Therefore, the civil contract on the involvement of an individual in work must have the appropriate name defined by the Central Committee of Ukraine: "contract" or "contract for the provision of services". Also, it is advisable in the preamble of the contract to emphasize its civil nature and the fact that the relationship arising from the conclusion of such an agreement is subject to regulation by civil law. The content of the contract should not include the conditions specific to the employment contract. The procedure for concluding CLN contracts will look like this (Fig. 1). At the enterprise it will be accounted for as follows: for example, a civil law agreement was signed on February 8, 2020, with an individual K.L. Klimenko for the provision of electrical installation services for UAH 3,000. The works were performed by February 20, 2020, in full within the stipulated period, the act of acceptance-transfer of the completed works was signed, so the company makes the necessary calculations (Table 2). The advantage of this method is that CLN contracts do not provide for hourly payment, payment is made for a certain amount of work according to the act of work performed, i.e. employees do not make sense to "cool down" at the facility, increasing their remuneration for time worked. The second advantage is that the CLN contracts provide for compliance with the work schedule, which is extremely important, because the company, in turn, when concluding contracts for work specifies the delivery date of the object and non-compliance leads to penalties. http://www.iaeme.com/IJM/index.asp 312 editor@iaeme.com
Improving the Accounting and Auditing of Payroll Calculations Customer apply for repair work of construction equipment Enterprise finds out the scope of work, which of the main No staff is free and whether there is a need for additional workers Yes employees are selected from the database, and CLN contracts are signed with them, where the scope of work, term and remuneration must be clearly established. repair works are carried out and handed over to the client for inspection the act of performed works is signed the company makes the necessary calculations, deductions and issues worked on CLN contracts remuneration to the contractor employees worked Figure 1 The procedure for concluding CLN contracts Table 2 Correspondence of accounts for accounting settlements with employees under the CLN contract Accounting Taxation The content of the business transaction Amount, Expenses, Dt Ct UAH UAH 1. Accrued remuneration under the CLN contract 93 685 3000,00 3000,00 2. Collected a single social contribution (at a rate of 22% on the actual accumulated remuneration under the 93 65/SSC 660,00 660,00 contract of a civil nature, regardless of its size, but taking into account the maximum value of the accrual base). 3. Income tax was deducted from the remuneration under 641/ Personal 685 540,00 – the CLN contract (18%) income tax 642/ military 4. Withheld military duty (1.5%) 631 45,00 – duty 5. Published by K.L. Klimenko from the box office 685 301 2415,00 – reward under the CLN contract 3.2. Accounting and Auditing of Payroll Calculations for Aparan LLC As already mentioned, a new department was established at Aparan LLC in January, the head of which, by prior agreement, does not receive a salary, but only a percentage of sales. There were no sales in January and February, so nothing was charged to the manager. This is wrong because there is a constitutionally guaranteed remuneration for work, as well as the requirements of the Labour Code of Ukraine and the Law of Ukraine "On Remuneration of Labour". 1. It clearly follows from the content of these regulations: the employer has no right not to accrue and/or pay salaries to employees employed under an employment contract, in http://www.iaeme.com/IJM/index.asp 313 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets particular when it comes to the head of the department. In this case, there is a rule on the minimum wage. Payment of the same less than the minimum size is admissible only at registration of performance of labour duties in incomplete volume. It is possible to make, depending on the company's profit, for example, bonuses to employees, but not their salaries. Even more, an integral consequence of the accrual and payment of wages are the corresponding accruals (withholding), payment and declaration (reporting) of personal income tax, single contribution and military duty. The employer also has no right to evade such fiscal obligations. If we talk about liability for non-payment of wages to an employee hired under an employment contract (including the director of the department), the current legislation indicates primarily two types: a) it is an administrative fine imposed on the head of the enterprise in the amount from 1700 UAH (Part 1 of Article 41 of the Code of Ukraine on Administrative Offenses). b) There is a basis for imposing financial sanctions on the company:  for violation of the established terms of payment of wages to employees for more than one month, its payment is not in full - in three times the minimum wage established by law at the time of detection of the violation;  for non-compliance with the minimum state guarantees in remuneration - in ten times the minimum wage established by law at the time of detection of the violation, for each employee in respect of whom the violation was committed (paragraph 3.4 of Part 2 of Article 265 of the Labour Code). In addition, since the employer had at least one employee under an employment contract, but it did not report on personal income tax, military duty and single contribution, in our opinion, there are grounds for bringing the head of the company to administrative responsibility. for the relevant violations following the requirements of the Administrative Code, and the company itself, the supervisory authorities will apply the financial sanctions provided by the Tax Code of Ukraine Law of Ukraine "On the collection and accounting of a single contribution to the general mandatory state social insurance "from 08.07.10 № 24b4- U1, To avoid such troubles with small amounts of income, employees, including directors, should be hired on a part-time basis with an appropriate proportional salary. After all, part- time pay is carried out in proportion to the time worked or depending on production. The employer, with the consent of the employee, has the right to establish part-time work by reducing the length of the working day or the number of working days per week. It is possible to provide even working hours lasting at least one hour a week. To accurately organize the accounting of payroll, we propose to the company to develop and approve at the company a schedule of primary documents for the accounting of payroll, which could strengthen the system of internal control in the enterprise. The document flow schedule will allow optimizing the ways of processing the primary document from the beginning of its creation to transfer to the archive, outline the timing of the processing of primary materials for accounting for payroll. The document flow schedule should be a mandatory appendix to the order of the accounting policy of the enterprise, and its use should be controlled by the chief accountant of the enterprise. The proposed form of the schedule of document circulation of primary documents on the accounting of remuneration at Aparan LLC given in Table 3. http://www.iaeme.com/IJM/index.asp 314 editor@iaeme.com
Improving the Accounting and Auditing of Payroll Calculations Table 3 The proposed schedule of primary accounting documents Document Who is Documents based on Assembly Place of Storage name composed which it is compiled period transfer location Recordkeeping, letters accounting Daily on accounting accounting Timesheet of incapacity for work, department weekdays department department certificates No later than the Recruitme accounting accounting accounting Employee statement first working nt order department department department day Order of acceptance of Immediately personal accounting accounting accounting the employee, personal after hiring an card department department department data of the employee employee As of the date of Tariff and qualification establishment of Staff accounting directory of works and accounting accounting the organization schedule department professions, tariff grid, department department and introduction organizational structure of changes Order to When accounting accounting accounting transfer to Employee statement transferring an department department department another job employee Three days Leave accounting accounting accounting Employee statement before the order department department department holiday Annually no Vacation accounting accounting accounting Employee statement later than schedule department department department January 5 Order on termination accounting No later than the accounting accounting of the Employee statement department last working day department department employme nt contract Settlement Three days and before the accounting accountant Timesheet cass payment payment of department statement wages Payment The day before accountant Settlement statement cass cass statement the salary As for the synthetic accounting of payroll calculations, it is conducted at the company on account 66 "Payments to employees":  on sub-account №661 "Payroll" reflects the accrual of wages for the current month;  on sub-account №662 "Settlements with depositors" - wages that were not paid on time; Having analyzed the works of leading scientists [29; 38; 49], we can not fully agree with the proposed methods and models of analytical accounting of payroll, as each of these options does not fully take into account the types of payments to employees made following the current legislation of Ukraine. To improve the model of analytical accounting of payments to employees, we propose to enter the following sub-accounts to the account №66 "Settlements of payments to employees", which are presented in Table 4. http://www.iaeme.com/IJM/index.asp 315 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets Table 4 The proposed structure of the account 66 "Calculations of employee benefits" Subaccount Name 661 Payroll calculations 6611 Basic salary 6612 Dismissal payments 6613 Post-employment benefits 6614 Calculations for the payment of leave 662 Settlements with depositors 663 Calculations for other payments 664 Calculations of wage payments in kind We describe the proposed analytical accounts of the first and second-order, and determine their composition: Basic salary – accrued salary, remuneration for work performed by established labour standards. It is set in the form of tariff rates (salaries) and piece rates for workers and wages for employees; Dismissal benefits – payments to the employee, which are payable by the decision of the company upon dismissal of the employee, or upon voluntary termination until he reaches retirement age. These include severance pay, cash compensation for all unused days of annual leave and the average salary for the period of employment; Post-employment benefits – payments to an employee that is payable at the end of an employee's work. Such benefits include: pension benefits (old-age pensions); other post- employment benefits, post-employment life insurance and post-employment medical care; Calculations for the payment of leave – the amount of annual and additional leave or payment of compensation for unused leave, leave in connection with training without separation from work; Settlements with depositors – wages not paid on time; Settlements for other payments – for payments related to the recognition of the employee's income as an additional benefit; Payroll payments in kind – the introduction of this sub-account will provide separate analytical accounting for cash and in kind. The use in the practice of the proposed model of analytical accounting of payroll will improve the methodology of accounting for payments to employees; strengthen information, control and management functions; to systematize the accrual, accounting and issuance of benefits to employees; expand the possibilities of using accounting information in management; increase the efficiency of interaction of different users of information and the efficiency of analytical work. 2. In order to improve both the audit as a whole at the enterprise, in particular from the company's payroll and to ensure control over the implementation of practical activities of participants by applicable law, as well as accounting policies and internal procedures, systematic analysis and evaluation each participant in general, assessing the effectiveness of the management system, timeliness, accuracy, completeness and accuracy of the primary and other activities in the reporting, will provide Asset protection, we propose to create an internal audit service. The internal audit auditor must be an independent staff member in the structure of the enterprise. Because the level of organization of the independence of the internal audit service directly affects the objectivity of internal auditors. The purpose of the audit of payroll is to establish compliance with the method of accounting for payroll transactions per the current legislation of Ukraine, to identify errors or http://www.iaeme.com/IJM/index.asp 316 editor@iaeme.com
Improving the Accounting and Auditing of Payroll Calculations violations, the degree of their impact on the reliability of financial statements to express an independent audit opinion on the safety of accounting on wages. The general plan of the audit of operations on payment of work and settlements with the personnel of the enterprise includes:  audit of registration of primary documents;  audit of the payroll system;  audit of the validity of deductions from wages and benefits;  audit of the identity of accounting indicators and accounting registers;  audit of calculations of withheld and accrued taxes and fees. The working document of the Program of the audit of calculations on payment of work can look as follows (Fig. 2). Audit Program for Calculation of Payments Enterprise Aparan LLC establishing compliance of the applied methodology of accounting for Task remuneration operations with the current legislation of Ukraine Audit period 10-30/01/2020 N. List of audit procedures Contractor Index Notes 1 Conducting an internal control test Existence of a collective agreement, provisions on the remuneration of 2 labour, regulations on vacations, regulations on bonuses, internal regulations, job descriptions, etc. Availability of personnel documents: – orders on admission, dismissal, granting leave – timesheets 3 – staff list (for hourly pay) – orders and prices (for piecework payment) – contracts of civil law nature Checking the availability of employment records, employment records. 4 books Checking the correctness of the calculation of wages for salaries, checking 5 the fact charges by orders, timesheets and other documents Checking the schedule of vacations, vacation orders, the correctness of the calculations of the days of proper vacation and accrual of vacations, 6 compensation for unused vacation. Checking the legitimacy of additional leave. Creating a reserve to pay for vacations. Checking the availability of sick leaves and the adequacy of their 7 completion, the calculation of temporary disability benefits, maternity benefits 8 Checking the correctness of wage indexation Checking the validity of the award and the availability of orders for their 9 award 10 Checking the correctness of the content of the writs of execution Checking compliance with the current legislation of accruals and 11 deductions, contributions and fees to the State Pension Fund. Checking the completeness and timeliness of transfers of contributions and 12 fees to the State Pension Fund 13 Checking the timeliness of payment of wages Comparison of the amounts reflected in the fin. reporting, with the balance 14 in the accounting registers and in the General Ledger 15 Compiling a list of detected errors and violations Date ________ Auditor_____________________________ /_______________/ Checked: The head of the working group__________ /________/ Date _______ Figure 2 Proposed program of auditing of payroll calculations http://www.iaeme.com/IJM/index.asp 317 editor@iaeme.com
Valentyna Panasyuk, Mariya Lalakulych, Erika Yuhas, Lesya Rybakova, Vitaliy Bobrivets This Program lists not only the main audit procedures for verifying payroll calculations for the average enterprise, but also takes into account the specifics of payroll accounting in an industrial enterprise, but in the process of auditing, the Program can always be finalized. The implementation of the planned procedures in the audit should be carried out systematically in a specific sequence, which is defined as the audit process and is conditionally divided into stages. To develop an effective audit approach to audit at the planning stage is necessary not only to develop and document an overall audit plan and program, but also to assess audit risk, having previously collected the minimum necessary information to understand and evaluate accounting and control systems. When auditing employee benefits, special attention should be paid to assessing the risk of control and its components. This is due to the high probability of errors in the accounting system due to lack of understanding of legislation governing labour relations, employee income tax and payroll and their ambiguous interpretation, violation of paperwork, processing large amounts of information that causes arithmetic errors. Thus, considering the issue of improving the audit of payroll in the enterprises, we can conclude that today one of the urgent needs is to hire an internal auditor in the enterprise, which will significantly improve the organization of accounting for payroll and eliminate existing shortcomings. This will increase the information potential, provide knowledge of all the intricacies of the activity and, in turn, greater responsibility for the recommendations provided. 4. CONCLUSION Thus, the proposed recommendations can help the company to streamline and improve accounting and introduce an audit of payments to employees, save the company financial resources because the identified violations are quite severe and will lead to penalties for inspection. Thus, the effectiveness of the proposed recommendations ranges from UAH 4,723 to UAH 47,230 and more. The conducted researches allow making a basis for further improvement of questions on the account and audit of calculations with employees of "Techinmash" PJSC (Ternopil) and "Aparan" LLC (Uzhhorod). A promising area for improving the accounting of payments to employees is the further improvement of analytical accounting, consistency of financial reporting of costs under International Accounting Standards. REFERENCES [1] Dzwigol H., Dzwigol-Barosz M., Kwilinski A. (2020). Formation of Global Competitive Enterprise Environment Based on Industry 4.0 Concept, International Journal of Entrepreneurship, 24(1), pp. 1-5. [2] Yang Zili (2003). Dual-rate discounting in dynamic economic–environmental modeling, Economic Modelling, 20(5), pp. 941-957. DOI: 10.1016/S0264-9993(02)00060-3 [3] Nekrasenko L., Pittman R., Doroshenko O., Chumak V., Doroshenko A. (2019). Grain logistics in Ukraine: the main challenges and effective ways to reach sustainability, Economic Annals-XXI, 7-8, pp. 70-83. [4] Lilia Rejeb, Zahia Guessoum (2006). Firms Adaptation in Dynamic Economic Systems, DOI: 10.1007/3-540-28547-4_5 [5] Ocheretko L. M., Khokhlova I. A. (2018). Problems of accounting and taxation of payments for employee payments and ways to solve them, DOI: 10.32702/2307-2105- 2018.10.65 http://www.iaeme.com/IJM/index.asp 318 editor@iaeme.com
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