Historical Payroll Audit Report
Ensure payroll accuracy during provider transitions with the Historical Payroll Audit Report.
Overview
The primary goal of the Historical Payroll Audit Report is to provide our partners' employers with confidence their migrated payroll data from their previous payroll provider is complete and accurate within their new payroll product.
Some payroll providers offer parallel payrolls, a process involving duplicate payroll entry and variance review in both the existing and new providers. The Payroll Audit Report is a reliable alternative to this process. It provides an output of payroll data comparing calculated payroll results from a company's previous provider to calculated payroll results in Check. This report outlines potential discrepancies for each employee's gross wages, benefits, post tax deductions, and taxes. This is the same output as a parallel payroll.
Why payroll audits matter
Payroll audits are a valuable step to ensure data accuracy when transitioning payroll providers. If data is setup incorrectly, the downstream impact for employers and their employees can result in potential tax notices, incorrect tax filings, costly tax penalties, and more.
Checks payroll audits, similar to parallel payrolls, ensures a smooth first live payroll by detecting common setup errors such as:
- Calculation Errors: Discrepancies in wage, tax, deduction, and benefit calculations.
- Data Entry Issues: Errors in employee information, hours, or classifications.
- Payroll Tax Discrepancies: Errors in federal, state, and local tax calculations.
- Benefits and Deductions Problems: Issues with setting up benefits, insurance, or retirement contributions.
- Indicator of Missing Wages: Detection of wage base limits per employee.
Identifying these types of variances and correcting them ahead of the first live payroll will lead to a frictionless experience for employers and employees.
When parallel payrolls may still be necessary
While the audit report usually suffices, there are instances where parallel payrolls may be preferred:
- Multiple Pay Rates: For employees with several pay rates. Check will only be testing the payroll against gross pay amounts and pay rates will not be reviewed in Check’s payroll audit.
- Regular Hours Paid: Testing autopay functions for hourly or salaried employees. Check does not store autopay options and therefore, a complete testing of this function may be preferred on the partner platform.
- Past Poor Experiences: If an employer has had problematic implementation experiences, it may be best to facilitate a traditional parallel payroll after the Check audit is complete.
Check recommends emphasizing the audit report's value in setup confirmation rather than proposing parallel payrolls, except in specific cases.
Using the historical payroll audit report with employers
For Check's Embedded Setup partners, the report undergoes initial review by Check’s setup team. Remaining variances that cannot be resolved by review of the previous provider setup are communicated to partners for further action. Partners should share this report with their employers to highlight any variances ahead of the first payroll.
For partners with in-house setup teams can utilize the report from Check's console, making adjustments and sharing the updated report with employers and employees.
1. Select Company along the left hand navigation
2. Search for the Company and click on the Company to open the Company Profile
3. Go to the Company Setup Tab
4. Scroll to Section 4: Audit Historical Payrolls
5. Select the most recent payroll date and click on Run Audit and download the report
Check will treat imported quarterly data as a single historical payroll, use the individual rows to calculate totals, and then match those to the imported totals. If Check’s calculations match what was provided for this historical payroll, Check will post a success screen reporting no issues. If Check’s calculations do not match the historical payroll, Check will post a list of discrepancies indicating the issues. Each discrepancy entry will include the employee (or contractor) the issue is for, which total does not match (the column name), and both the original value (imported through the spreadsheet) and the value calculated by our system.
For example, you might see a discrepancy report like the following, including a section for detailed warnings.
Click an Employee’s name to get a detailed breakdown of all calculated discrepancies.
You may also download a CSV version of the audit report, listing all discovered discrepancies, which you may then import to any tool to identify issues.
To download this CSV, click Download Audit Report after you run the audit.
Once you have identified discrepancies, and have made adjustments to the implementation spreadsheet, re-import it using the Add Historical Payrolls section of the Check Console. Then, repeat the steps to audit the new historical payroll created for the pay period with corrected discrepancies. Repeat this audit / re-import process until you’ve reduced discrepancies to an acceptable state.
Note: In cases where variances are expected (such as a one-cent difference), click “proceed with discrepancies” to continue with the implementation process. Our support team should communicate any unusually large discrepancies that cannot be corrected by fixing data and re-importing.
We recommend partners use the Historical Payroll Audit Report to review the following payroll items in each report column.
Correct employee counts
Confirm the payroll reports from the previous provider and Check have the same total number of employees. Employers can also complete a lookup to verify each employee from the previous provider has an output in the Historical Payroll Audit Report.
Consistent Totals
Each payroll item identified for an employee (gross wages, taxes, benefits, deductions etc.) includes three columns:
Column Name | Description |
[Payroll Item Name] | This is the Payroll Item Amount from the company's previous provider. |
[Payroll Item Name] Computed | This is the Payroll Item Amount computed from Check's calculations. |
[Payroll Item Name] Variance | This is the variance between the company's previous provider and Check's calculations. |
Example:
Column Name | Description |
Net Pay | This is the Net Pay Amount from the company's previous provider. |
Net Pay Computed | This is the Net Pay Amount computed from Check's calculations. |
Net Pay Variance | This is the Net Pay variance between the company's previous provider and Check's calculations. |
We recommend partners review the variance column for each employee's payroll item and document which employees have a variance.
Common payroll variances
In an ideal report, the payroll items for gross wages, taxes, benefits, and deductions would be the same for all employees. If companies see discrepancies across payroll items for employees, please review the common variances below.
Payroll Item | Description | Common Variances |
Gross Wages | Earned wages, before payroll deductions including itemized earnings such as bonus, commission, holiday pay etc. | • Employees have an updated pay rate or may be missing pay. |
FICA (Social Security) | Federal imposed employee and employer tax; at a rate of 6.2% of taxable wages. | Note: We expect the variance for FICA to be within +/- $0.03.
• Employees may have reached wage limits and FICA is no longer required to be deducted.
• If all earnings and deductions are equal, incorrect benefits setup. |
Medicare | Federal imposed employee and employer tax; at a rate of 1.45% of taxable wage. | Note: We expect the variance for Medicare to be within +/- $0.03.
• If all earnings and deductions are equal, incorrect benefits setup.
• Employees earning over $200,000 in taxable wages will incur an additional 0.9% tax. |
Federal Tax Withholding | Federal imposed employee tax calculated using the IRS percentage method tables, released annually. | • If all earnings and deductions are equal, incorrect benefits setup.
• Employee recently had a change to their withholding status (change in marital status or dependents)
• Different pay frequency
• Previous system does not display this information correctly. |
State Tax Withholding | State imposed employee tax. Calculations vary by state using flat rates, income brackets, and more. | • If all earnings and deductions are equal, incorrect benefits setup.
• Employee recently had a change to their withholding status (change in marital status or dependents)
• Different pay frequency
• Previous system does not display this information correctly. |
Federal Unemployment Tax (FUTA) | Federal imposed employer tax for the first $7,000 of taxable wages earned by each eligible employee. FUTA rate begins at 6% but may be reduced depending on each state's rules.
Does not affect net pay. | Note: We expect the variance for FUTA to be within +/- $0.03.
• Employers may have met the FUTA requirement for employees that have earned over $7,000 in FUTA taxable wages and are no longer required to pay FUTA for certain employees.
• The FUTA rates may need to be confirmed to ensure accurate calculations. |
State Unemployment Insurance (SUI) | State required employer tax to fund state sponsored unemployment insurance. Calculations and wage limits vary by state.
Does not affect net pay. | • Employers may have met the SUI requirement for employees that have earned over the required SUI wage limit.
• Rates may need to be confirmed to ensure accurate calculations. |
Benefits | The IRS and most states recognize a number of qualified pre-tax deductions (Cafeteria Plan) that are deducted from an employees pay and will not be included for certain tax calculations. Some states consider these benefits taxable.
Examples: Medical Insurance, Dental Insurance, Vision Insurance, etc. | • Benefit variances will need to be reviewed to ensure the employee has the most up to date benefit deduction according to the employer's system of record (often based on the set up directly within each plan providers portal). |
Post-tax Deductions | An amount taken from an employee's paycheck after all required taxes have been withheld. | • Post-tax deduction variances will need to be reviewed to ensure the employee has the most up to date deduction according to the employer's system of record. |
Garnishments (besides Child Support) | A court order directing employers to collect debts on an employee's behalf and requiring employers to send payment on behalf of the employee to the applicable agency. | • Garnishment variances will need to be reviewed to ensure the employee has the most up to date deduction according to the most recent court order.
• Each court order will outline calculations for garnishments. At this time, Check is only able to provide a percentage calculation on gross wages. Employers have the option to calculate the flat dollar amount in lieu of relying on the Check system calculation. |
Child Support | A court order directing employers to collect funds on an employee's behalf and requiring employers to send payment on behalf of the employee to the applicable child support agency. | • Child Support variances will need to be reviewed to ensure the employee has the most up to date deduction according to the most recent court order. |
Net Pay | The amount employees earn after all payroll taxes and deductions are subtracted. | • If the net pay has no variance, this reduces risk for payroll discrepancies on your employer's first payday.
• Net pay variances will need to be reviewed to ensure the employee has the most up to date gross wages, taxes, benefits, post tax deduction etc. according to the employer's system of record.
• If all earnings and deductions are equal, incorrect benefits setup. |
Last updated on May 31, 2025