Internal Controls for Payroll Overview

Review the below information for accounting standards related to internal controls for payroll.

The below standard is focused on guidelines for the release of payroll information and employment verifications. By clearly defining who is authorized to release specific types of employee information and under what circumstances, the standard helps protect sensitive data and ensures compliance with legal and regulatory requirements. This structured approach to the release of payroll information and employee verification helps minimize the risk of unauthorized disclosures, fraud, or misuses of confidential information. Understanding this standard is important because it reinforces accountability, promotes consistency across units, and safeguards the integrity of university operations. As part of a broader internal control framework, this standard ensures that information is handled responsibly, supporting both operational efficiency and ethical standards.

The Office of the University Controller is in the process of converting Standard Operating Procedures (SOPs) into IU accounting standards. As such, these SOPs are no longer being updated. Information is as current as of the date of last revision available on these SOPs. Please continue to check back as SOPs are converted into standards within this book.

• PSOP 1.0 – Fiscal Officer Responsibility

• PSOP 16.0 – Departmental Retention/Destruction of Payroll Records

UCO-PAY-2.02: Release of Payroll Information and Employment Verifications

Prerequisites

Prior to reading the standard on Release of Payroll Information and Employment Verifications, it is beneficial to review the below items to gain foundational information:

1. FIN-PAY-001: Payroll Compliance
2. FIN-ACC-650: Financial Compliance: Authority and Accountability

Preface

This standard is in place to establish guidelines for the release of public payroll information and for the conduct of employment verifications.

Introduction

Indiana University is a public agency subject to Indiana’s open records law. As such, the university is obligated to provide certain payroll and employment information upon request from members of the public. Further, current and former employees often want the university to verify their payroll and employment information for background checks, loan applications, and benefits enrollment. The type of information that University Payroll can release depends upon who is making the request and the manner of the request.

Importance and Impact of the Release of Payroll Information and Employment Verifications

In Indiana, the Access to Public Records Act (APRA), codified as Indiana Code 5-14-3, ensures public access to government records, with some exceptions, and requires agencies to respond to requests within specific timeframes. Indiana University is bound by Indiana Code 5-14-3-9.5 (h) to comply with valid requests for release of payroll and employment information.

Release of Payroll Information and Employment Verifications Discussed in Detail

University Payroll has the authority and responsibility to create, implement, monitor, modify, and enforce operating procedures and internal control processes consistent with this standard to ensure employment and payroll information is provided in compliance with the university’s legal obligations and in response to the requests of current and former employees. University Payroll may use the services of third-party providers to respond to requests for verifications of employment.

Current/Former Employee Initiated Request

• Traditional Lender (for mortgages, auto loans, etc.): University Payroll will direct the requestor to The Work Number to access the requested information. If The Work Number cannot satisfy the request, then after receiving a copy of the request with the employee’s written authorization, complete the form providing the requested information and return it via secure fax or mail. Verify the fax number before transmitting the form.
• Government Agency (FSSA, DOE Public Service Loan Forgiveness Program, SSA, Department of Workforce Development, and U.S. Office of Personnel Management, etc., for background checks, loan forgiveness, and benefits enrollment): After receiving a copy of the request, University Payroll will complete the form, providing the requested information, and return it via secure fax or mail to the requestor. University Payroll will verify the fax number before transmitting the form.
• Human Resources and Departmental Personnel Files: The release of these files is managed by Human Resources. For more information on this process, visit the Staff Personnel Files Guidelines Webpage.

If the employee has not initiated the release of information – University Payroll will direct the requestor to communicate with the General Counsel’s Office.

Outside Agency Requests

• Court Order (other than a garnishment order): Immediately forward the order to the General Counsel’s Office.
• Garnishment Order: Immediately forward the order to University Payroll Operations.
• Governmental Agency Request (for reasons other than for background checks, loan forgiveness, and benefits enrollment): Immediately forward agency request to the General Counsel’s Office.
• Discovery request issued pursuant to a legal proceeding: Immediately forward the discovery request to the General Counsel’s Office.

All other requests should be directed to the General Counsel’s Office.

Requirements and Best Practices

Requirements

1. The university is obligated to provide certain payroll and employment information upon request from members of the public according to Indiana Code 5-14-3. If a university department receives a payroll information release or employment verification request, they are required to follow the steps outlined above.