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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Payroll reconciliation answers one question: does the payroll register agree with every other record of the same money. There are three other records that matter: the bank statement, the general ledger, and the statutory returns.
Each reconciliation catches a different kind of error. Doing one of them is not a substitute for the others.
01
Reconcile against the final, locked register for the month, not a draft. If the run was reprocessed after approval, use the version that was paid.
The register should show, for each employee, every earning and deduction head, gross, net, and the employer's statutory contributions. Totals by head are what you reconcile; employee-level detail is what you use to find differences.
02
Compare net pay in the register with the salary debits in the bank statement. Then compare at employee level with the bank's credit report.
Watch for itA returned credit is still owed. Track it to repayment, and correct the account details in the employee record so it does not fail again next month.
03
The payroll journal should post gross salary by cost centre, each deduction to its liability account, and employer contributions to expense and liability. Compare each ledger balance with the register total for the same head.
Then check that the liability accounts clear. EPF, ESI, TDS and PT payable should fall to zero, or to a known timing difference, once the month's deposits are made. A liability that grows every month means something is deducted but not paid, or paid but not booked.
04
Each return is a separate statement of the same payroll, made to a government authority. It must agree with the register.
05
List every difference with its cause and how it will clear: a timing difference that reverses next month, a correction to be made through an adjustment, or an error to be fixed in the next return. Do not net differences off against each other.
Keep the monthly reconciliation with the register, bank statement, ledger extract and returns. At the year end, the twelve months together become the basis for reconciling Form 24Q and Form 16.
Every guide ends here rather than in a summary. If a line below is not true yet, that is the next thing to do.
Checking that the payroll register agrees with the bank statement, the general ledger and the statutory returns for the same period, and explaining every difference.
Every month, after the run is paid and returns are filed. A year-end reconciliation is far easier when the twelve monthly ones are done.
Returned bank credits, payments made outside the run, salaries on hold, journals posted from a draft register, and contributions deducted but deposited in a different period.
No. List each one separately. Two offsetting errors produce a matching total and hide both problems.
The checklist above is generic by necessity. Bring your own structures, states and rota and we will tell you which lines are already true and which are not.
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