Issue link: https://www.e-digitaleditions.com/i/73199
HRO Today Forum APAC Sailing in Whirlpools Multiple locations, multiple currencies—multiple challenges. By Ang Weina Payroll administration is often viewed as a non-rocket science function of HR. Such perception is not surprising since payroll software is readily available in the market. After all, it is only a task with the ultimate objective to ensure timely distribution of paychecks to employees every month. However, as a company grows beyond its home territory, there is no doubt that the recruitment of employees will extend overseas, too. This will result in the payroll team handling an increased volume of employees as well as cross-border moves. The non-rocket science payroll has now evolved into a whirlpool of complexities, from what used to be a headquarters-only payroll to one that requires multiple-location functionality. At times, the complexities of home and host country payroll are coupled with the request of split payroll and disbursements in multiple currencies. Thus, the concerns of compliance over people managing the regional payroll process intensify. More importantly, the company needs to identify risks in a timely manner, implement stop-gap measures, and ensure the desired results through monitoring the process and updating the technology. What is often overlooked is the employee experience. How and where payroll is being paid doesn't concern the employee. What matters most is getting paid on time and for the right amount. Managing compliance therefore remains high on the agenda. The focus of a company in the past used to emphasise cost savings and where possible, reduce the function of local finance. Regulatory legislation such as Sarbanes-Oxley, high penalties imposed by tax authorities for noncompliance, and challenges arising from difficult and diverse audits are external factors that push companies to review their operational needs. A well-managed regional payroll will be able to deliver the following: • Quality in local statutory accounting records; • Timely and correct tax and value-added tax submissions; • Avoidance of compliance-related penalties; • Cash flow optimisation; • Quality support to tax authorities and external auditors, and • Accountability to internal stakeholders. A shared service structure (SSC) is commonly used to manage offshoring initiatives, including regional payroll management. However, operational challenges in an SSC cannot be denied. For example, it can be difficult keeping up with local accounting rules, taxes and languages, as well as the task of monitoring several local accountants, tax advisors, and tax authorities. So what's the solution? Consider an option where the company and a service provider collaborate. With the goal for both the company and the service provider to drive quality assurance and resource management, both parties can complement in the coordinating of the execution of standard global processes; status reporting; data collection; documentation; and management reporting. Regulatory legislation such as Sarbanes-Oxley, high penalties imposed by tax authorities for non- compliance, and challenges arising from difficult and diverse audits are external factors that push companies to review their operational needs. The global structure is then segmented into regional areas. These are further streamlined into local jurisdictions, where the local service delivery is supported by local expertise and relationships, both internally within the company and externally by the service provider. Such structure will see more efficient and harmonised processes and systems. The single point will mean better resolution of issues. The regional structure will enable better monitoring of reconciliation between the management books, the outsourced books, and the tax records. Management reporting and dashboards will reflect a more accurate picture. Ang Weina is a partner at Deloitte Malaysia's tax practice, where she leads the global employer services division. SPRING 2012 | www.hroglobal.com [15]