Talent Management

Compensation Systems Audit

MASCPA Compensation Systems Audit Highlights
A MASCPA Sr. Consultant will work with the client’s designated staff member(s) and designated legal counsel to plan and conduct the compensation audit, perform fieldwork and prepare a final internal audit report under Attorney-Client Privilege to protect the confidential exchange of information between the client organization, MASCPA’s auditor, and its attorneys made during an internal compensation audit. The purpose of this Attorney-Client Privilege is to encourage open and honest discussions to ensure that the law is upheld.

All arrangements for legal counsel and fees associated with retaining legal counsel will be paid by the client company and are not part of this agreement.

For an organization with <150 employees, it is anticipated that 40 hours of MASCPA’s technical assistance will be required to complete this audit.

Skills provided by MASCPA
MASCPA will provide a technically skilled HR professional with extensive experience auditing/consulting for human resource, payroll functions, and relevant professional experience. The Compensation Audit will be conducted by an SPHR certified Human Resources professional with current and practical experience in application of Human Resources laws and regulations.

Deliverables

Compensation risk analysis and related recommended follow-up actions
MASCPA’scompensation auditor will develop a framework of analysis within which compliance issues will be identified and prioritized and identify compensation practices and policies either currently in place, or missing, and defensible, or not defensible, if challenged. This will include a review of compensation policies, practices, processes and related “employee handbook” materials, and may also include interview of selected individuals who have responsibilities for implementing or verifying compensation activities.
In partnership with your organization’s designated internal point(s) of contact and legal counsel, MASCPA’s auditor will review your organization’s documented (and undocumented) compensation related processes and systems. This will include a review of the following elements of your compensation practices:

1. How decisions regarding an individual’s Compensation package communicated to the individual
2. The organization’s documented or undocumented policies for conducting its Compensation activities
3. Resources provided for Compensation activities
4. How Individuals performing Compensation activities are prepared or trained to perform their compensation related responsibilities.
5. How measurements and surveys are developed and utilized to determine the status and performance of Compensation activities.
6. Aggregate trends in compensation activities
7. Ho w the organization monitors decisions measured and reviewed on a recurring basis.
8. Verifying that compensation activities are conducted according to the organization’s documented policies, practices, procedures, to identify where compliance and noncompliance issues may exist.

Project Work Plan
The Audit will include a review of exposure issues related to distinct stages of the employment relationship including:

1. Hiring, job descriptions, resumes, application forms, employment contracts, employment, salary verification, promotions, and employee evaluation, e.g., performance appraisals
2. Actions taken to correct inequities in compensation
3. Deviations from the organization’s policy and plan
4. How each individual’s compensation package is determined
5. How compensation adjustments made based, e.g., on each individual’s documented accomplishments against their performance objectives; seniority; past experience, responsibility, etc
6. Job positions classified as “exempt” from overtime requirements with a focus placed on jobs that may fall into “gray” areas

WHY YOU MAY NEED A COMPENSATION AUDIT
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