R365 Payroll audit and troubleshooting guides payroll administrators through verifying earnings, deduction, and tax calculations before approving a payroll batch, and tracing the cause of any discrepancies. Run a full audit prior to each payroll approval or any time calculations do not match expectations.
Prerequisites
Confirm the following before running a payroll audit:
The Payroll application is visible in the R365 app switcher. The Payroll app only appears when R365 Payroll is enabled for your tenant. If it is not visible, contact your R365 account manager.
POS integration is configured and the Daily Sales Summary (DSS) is polling data into R365. The DSS is required for the POS Data Audit.
Employee records are fully onboarded to R365 Payroll. Employees who have not completed onboarding will not appear in payroll batches.
Access to the following reports: Workforce Preview Report, Employee Census Report, Benefits and Deductions Report, and Payroll by Pay Period Report
Required permissions
Running payroll audit reports requires the Payroll > Workforce Payroll > Reports > View Reports permission. In R365 default roles, this permission is included in Payroll Admin, Payroll Clerk, and Full Access.
Approving payroll batches requires the ability to approve Payments in the Payroll app. This is included in Payroll Admin and Full Access. Payroll Clerk can calculate and verify payroll but cannot approve payments.
Payroll Audit Overview
A full payroll audit confirms that all areas of R365 are configured correctly for payroll and helps trace the cause of discrepancies.
About rounding
While auditing and reviewing payroll reports, be aware that different systems round partial minutes and percentages differently. This can result in small discrepancies in earnings, deduction, and tax amounts.
Discrepancies of less than 10 cents are typically caused by rounding differences and do not require correction.
Recommended audit sequence
Perform audits in order
For a thorough payroll audit, complete all four audits in sequence: (1) POS Data Audit, (2) Employee Record Audit, (3) Benefits and Deductions Review, (4) Gross-to-Net Calculation Audit. Starting with POS data ensures the source data is accurate before reviewing employee records and calculations.
Audit and review descriptions
Audit/Review | Description | Data Reviewed | Discrepancy Troubleshooting |
|---|---|---|---|
POS Data Audit | The POS Data Audit compares POS punch and pay rate information to the punch and pay rate information in R365. |
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R365 Employee Record Audit | The R365 Employee Record Audit compares the list of employees expected for payroll to the list of employees onboarded for payroll in R365. |
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Benefits and Deductions Review | The Benefits and Deductions Review reviews the list of configured deductions per employee. |
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Gross to Net Calculation Audit | The Gross to Net Calculation Audit reviews the calculated earnings, deductions, and taxes within Workforce. |
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Areas and configurations for troubleshooting discrepancies
The following R365 settings and configurations affect earnings, deduction, and tax calculations after POS data has been polled. Issues found in POS data must be corrected in the POS before the DSS polls again.
Discrepancy | Area/Setting | Impacts to Payroll |
|---|---|---|
Overtime Hours or Earnings | The operational calendar for a location determines the first day of the week. The first day of the week is used for overtime calculations. | |
Missing Employee | The Employee Master setting should be set to 'R365'. This ensures that employee information such as address, name, hire date, and so on that was updated in R365 is not overwritten nightly by POS data. | |
Tax Location | The address for each payroll location is used to determine required taxes. | |
Overtime Hours or Earnings | When overtime tracking is set to 'R365', overtime is calculated in R365 using R365 overtime rules. Overtime calculations provided by the POS are not used. | |
Punch Date or Time | When punch edits are enabled in R365, changes to punches made in the POS after the DSS is polled will not be imported. Punch edits must be maintained in R365. | |
Penalty Earnings |
| When labor rules are configured, additional earnings will be calculated and automatically added. These earnings will not appear in POS reports. |
Overtime Hours | Overtime calculations use business days to determine the hours worked by an employee in a business day. By default, business days in R365 start at 12:00 am. Start of Day settings determine the start time for a location's business day. Align a location's Start of Day Time to the POS End of Day Time. | |
Punch Date or Time | When enabled, punches must be edited directly in R365. Edits made to punches in R365 are not reflected in reports from the POS. | |
Regular Earnings | When enabled, pay rates can be edited per punch in R365. Changes to pay rates are not reflected in reports from the POS. | |
Tips | Tips can be redistributed via import in R365. Tips re-distributed in R365 are not reflected in reports from the POS. | |
Tips | Tips can be redistributed via Tip Automation. Tips re-distributed in R365 are not reflected in reports from the POS. | |
Earnings | Earnings can be added or edited directly in Workforce. Edits made to earnings will not appear on POS or DSS reports. | |
Earnings | One-time payments can be used to add earnings or deductions in Workforce. One-time payments will not appear on POS or DSS reports. | |
PTO Earnings |
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Taxes | Workforce: Unemployment Rate | A payroll location's unemployment rate is used when calculating taxes. |
Payroll Batch Date Range | A payroll location's pay cycle is used to determine the date range of each pay cycle payroll batch. | |
Tax Location | The home address for each employee is used to determine the required taxes for that employee. | |
Tax Location | The primary location for an employee is used to determine the required taxes for an employee's work location. | |
Salary Earnings | The jobs and pay rates of salaried employees are used to automatically populate salary earnings per pay cycle payroll batch. Salary earnings will not appear on POS or DSS reports. | |
Deductions | The employee-specific benefits and deductions configurations are used to calculate deductions per payroll batch. | |
Missing Employee | Only employees who have been fully onboarded to Payroll will be included in payroll batches. | |
Missing Employee | Only active employees will be included in payroll batches. Employees with the status of 'Leave' or 'Terminated' will not be included. | |
Missing Employee | Employee Record: Integrations | POS Employee records are linked to Employee records to connect the Employee record to employee-specific POS data. |
Using this table during troubleshooting
When a discrepancy is identified during any step-by-step audit below, use the Discrepancy column in the table above to locate the relevant area or setting in R365. Review that setting and correct it if needed, then re-run the affected report to confirm the discrepancy is resolved.
POS Data Audit: Step-by-step
The POS Data Audit compares POS punch and pay rate information to the corresponding data in R365. Complete this audit first, as POS data is the primary source for earnings calculations.
POS Data Audit guide
Select a data range to compare.
R365 recommends comparing all dates within a single full pay period.
From the POS:
Run a punch report for the selected date range that shows all punches, pay rates, hours, and tips.
From My Reports:
Run the Workforce Preview Report with the following report settings:
Start Date and End Date - Set to the selected date range for the pay period.
Pay Frequency - All Employees.
Compare the following key fields for each employee and punch:
Verify the following fields match between the POS report and the Workforce Preview Report
Employee Name
Punch Dates
Punch Times
Jobs
Pay Rates
Regular Hours
OT Hours
Total Hours
Regular Earnings
Overtime Earnings
Tips
Troubleshoot discrepancies.
For each discrepancy found, identify the cause using the Areas and configurations for troubleshooting discrepancies table above. Common causes include:
Incorrect POS settings or inaccurate POS calculations
Incorrect R365 settings for a location (overtime tracking, punch edits)
Incorrect R365 overtime rule settings
Missing or duplicated employee records
Punch or tip edits made in R365 after POS data was polled
Issues caused by POS data must be corrected in the POS before the next DSS poll. Issues caused by R365 settings can be corrected directly in R365.
Employee Record Audit: Step-by-step
The Employee Record Audit compares the list of employees expected for payroll against the employees onboarded to payroll in R365. Run this audit to confirm all employees are correctly set up before payroll is processed.
Employee Record Audit guide
Compile a full list of employees expected from Payroll.
Use the POS punch report from the POS Data Audit as the basis for this list. Add any salaried employees or employees who do not punch in through the POS from a separate source (such as an HR record or prior payroll register).
From Reports: Download the Worker census report with the following settings:
Employee Status - Active.
As of Date - First date of the pay period being audited.
Compare reports and confirm all expected employees are listed on the Employee Census:
Confirm all expected employees appear on the Employee Census Report. Verify the following fields for each employee:
Employee Names
Payroll Status
Primary Location
Jobs
Employment Status (Active, Leave, Terminated)
Troubleshoot discrepancies.
For each discrepancy found, identify the cause and take the appropriate corrective action:
Employee missing from report — the employee may not be fully onboarded to payroll, may have an incorrect employment status, or may be assigned to the wrong location. Review the Employee Record: Payroll Status and complete onboarding if needed.
Employee on report but not expected — confirm the employee's employment status and primary location are correct. Terminated employees should not appear in active payroll batches.
Duplicate employees — duplicate records may be caused by multiple POS integrations. Review the Employee Record: Integrations setting to merge or correct the records.
Incorrect jobs or locations — update the employee's employment record with the correct job and primary location.
Benefits and Deductions Review: Step-by-step
The Benefits and Deductions Review confirms that all employee deductions and employer contributions are configured correctly for the pay period.
Benefits and Deductions Review guide
From R365 Payroll, download the Benefits and Deductions Report with the following settings:
Start Date — first day of the pay period being audited
End Date — last day of the pay period being audited
Review key fields for each employee.
Confirm the following fields are accurate for each employee:
Employee name
Deduction type
Employee deduction amounts
Employer contribution amounts
Troubleshoot discrepancies.
Incorrect deduction amounts are typically caused by incorrect deduction configurations on the employee record. Review the employee's deduction settings and correct the configuration as needed. Re-run the report to confirm the correction.
Gross-to-Net Calculation Audit: Step-by-step
The Gross-to-Net Calculation Audit reviews calculated earnings, deductions, and taxes in R365 Payroll. During onboarding, compare this audit against the payroll register from an existing payroll system to confirm R365 calculations before go-live.
Perform this review for each payroll batch prior to approval.
Approving a payroll batch is irreversible
Once a payroll batch is approved and submitted for processing, it cannot be recalled or reversed. Complete the Gross-to-Net Calculation Audit and resolve all discrepancies before approving a batch.
Gross-to-Net Calculation Audit guide
Select a pay period to audit.
Identify the pay period you want to audit. For go-live parallel audits, use the same pay period in both R365 and the existing payroll system.
Run the Payroll by Pay Period Report.
From R365 Payroll, run the Payroll by Pay Period Report for the selected pay period.
Run a parallel register report (go-live audits only).
If completing a parallel audit prior to go-live, run a payroll register report for the same pay period in the existing payroll system. This provides the comparison baseline for reviewing R365 calculations.
Review key fields for each employee.
Confirm the following fields match expected values for each employee:
Employee name
Primary location
Regular hours
Overtime hours
Double overtime hours
Earnings amounts per earning type
Gross pay
Deductions
Total tax
Net pay
Troubleshoot any discrepancies before approving the payroll batch.
For each discrepancy, use the Areas and configurations for troubleshooting discrepancies table in the overview section above to identify the setting causing the difference. Common causes include:
Missing or duplicate employees — review payroll status and integration settings on the employee record
Incorrect earnings — check that jobs, pay rates, and labor rules are configured correctly; review adding and editing earnings if manual adjustments are needed
Incorrect deductions — verify deduction configurations on the employee record
Incorrect taxes — confirm the employee address and primary location are correct, as both are used to determine required taxes
Incorrect employer contributions — review deduction and benefit configurations on the employee record
Resolve all discrepancies before approving the payroll batch. Approving an incorrect payroll batch cannot be undone.