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Payroll Was Wrong, and Nobody Knew How Wrong. Here Is What Payroll Remediation Looks Like.
- 2 days ago
- 6 min read
Case Study: Payroll Remediation & SCHADS Award Compliance | NFP & Community Services | Audit Readiness
The Client's Question
Payroll is one of those things that organisations tend to assume is working correctly - right up until the moment they discover it isn't.
The warning signs are almost always there:
push-back from staff around errors in allowances
several staff members raising questions about their leave entitlements
payroll migration leaves unexplained discrepancies in the general ledger
pre-audit review surfaces entries that don't reconcile cleanly
And then, as the investigation deepens, it becomes clear that the problem is not a small one.
This is the situation Diamond Advisory has been called into across multiple organisations - and the pattern is consistent. Payroll errors are rarely the result of dishonesty, but they are almost always the result of complexity that has been underestimated:
award interpretation done once and never reviewed,
system migrations assumed to have transferred data correctly,
manual adjustments made to fix one error that accidentally created others.
For organisations operating under the SCHADS Award - community services, disability providers, home care and crisis accommodation - the complexity of the award makes errors not just possible, but common.
Broken shift allowances, classification errors, incorrect pay point progression, leave accrual miscalculations - these are well-documented compliance failures across the NFP sector.
And the consequences are significant:
Back-payment obligations that can stretch years into the past.
Fair Work Ombudsman investigations.
For NDIS providers, the additional risk of NDIS Commission scrutiny that can threaten registration status.
And the very human cost of telling staff their pay has been wrong.
The cost of payroll remediation almost always exceeds the investment required for proactive compliance. And it is always better to find the errors yourself than to have a regulator find them for you.
How can we cost effectively review, remediate, and rectify our SCHADs payroll issues?
What Diamond Advisory Did To Optimise Cashflow
Engaged to conduct a pre-audit payroll review and remediation after a messy payroll migration, Diamond Advisory took a structured, risk-prioritised approach - working methodically through every aspect of payroll compliance before the auditors arrived.
Staff contract review and SCHADS Award compliance verification
Every employment agreement was reviewed against current SCHADS Award requirements and Fair Work Act obligations. Several discrepancies were identified between what contracts said and what the payroll system had been configured to deliver - including classification errors, leave accrual miscalculations and allowance application failures. These were corrected, with back-pay calculated and processed for affected staff before the audit commenced.
This is the step most organisations skip: Reviewing contracts against award obligations is painstaking, detailed work. But it is the foundation of genuine payroll compliance, and it is the first question a Fair Work inspector asks.
Pre-migration payroll snapshot
A comprehensive pre-migration snapshot was created, documenting every balance in the old payroll system at the point of closing. This became the baseline against which the migration could be verified - the document that answers the auditor's first question precisely and completely.
Post-migration snapshot and migration map
A matching post-migration snapshot was created for the new system at opening, and a detailed migration map was built showing exactly how every balance transitioned from one system to the other. Every discrepancy was explained, every manual adjustment was documented, every correction was evidenced.
This is the work that transforms a payroll migration from an audit risk into an audit strength. The auditor does not have to trust that the migration was done correctly - they can see, in documented detail, that it was.
ATO Single Touch Payroll remediation
Single Touch Payroll reporting was reviewed and corrected to ensure year-end tax submissions for all employees were accurate and compliant with ATO obligations. Migration events create specific Single Touch Payroll reporting requirements that are frequently missed - and missing them creates downstream compliance problems for both the organisation and individual employees.
Workpapers for every payroll-related general ledger account
Detailed workpapers were prepared for every payroll-related general ledger account, clearly mapping migration entries, their financial impacts and their reconciliation to both old and new system balances. The auditor received a complete, organised set of documentation covering every aspect of the payroll function - before the audit began.
Embedding sustainable payroll processes
Beyond the remediation, the engagement was used as an opportunity to strengthen ongoing payroll compliance - improving record-keeping disciplines, establishing a clear audit trail year-round, and building practices that would make the organisation consistently audit-ready at every subsequent financial year end.
The Results
100% of payroll workpapers completed before the audit began - every general ledger account documented, every migration entry explained and evidenced
Audit costs reduced by 5% - pre-audit preparation meant auditors spent less time on questions that had already been fully answered
100% of staff paid correctly - SCHADS Award compliance errors identified and corrected before the audit, including back-pay processing for all affected employees
All ATO Single Touch Payroll obligations remediated and confirmed compliant
AGM deadline met - accounts delivered on time despite the complexity of the payroll migration and compliance work
Sustainable payroll compliance processes embedded for ongoing audit readiness
Clean audit outcome - no qualifications, no delays, no surprises
"Eve's expertise during our audit preparation was truly transformative. Her meticulous attention to detail and incredible intuition for pinpointing issues made the entire process seamless and stress-free. Thanks to her guidance, we not only met all our AGM deadlines but also uncovered valuable insights that will elevate our future audits." - CFO
A Note on Large-Scale Payroll Remediation
Payroll remediation does not only arise from system migrations. Diamond Advisory has also led large-scale payroll remediation programs in complex, high-volume environments - work requiring the same technical rigour applied at significantly greater scale, with stronger consequences for errors and delays.
This kind of work demands an advisor who understands not just the accounting entries but the full compliance framework: the SCHADS Award in its current form, Fair Work Act obligations, Enterprise Agreements and other Engagement Instruments, ATO reporting requirements and the organisational sensitivity involved in disclosing payroll errors to staff and, where required, to regulators.
Getting it right the first time is not optional. Getting it right under time pressure, while maintaining staff trust and meeting audit deadlines, requires both technical expertise and genuine sector experience.
Is this your Situation?
For CEOs and Executives: If your organisation has recently completed a payroll migration, is approaching an audit, operates under the SCHADS Award, or has any reason to believe payroll may not be fully compliant - the right time to find out is before the auditors do. Diamond Advisory can conduct a payroll health check, identify what needs to be fixed and address it properly before it becomes an audit finding or a Fair Work matter.
For CFOs and Finance Leads: SCHADS Award payroll compliance sits at the intersection of accounting accuracy, award interpretation, ATO obligations and employment law. Getting it right requires someone who understands all four dimensions - and who can document the work in a way that satisfies an auditor and, if necessary, a Fair Work inspector. That combination is rarer than it should be.
For NDIS Providers: SCHADS Award non-compliance creates risks that go well beyond Fair Work. For registered NDIS providers, payroll compliance failures can trigger NDIS Commission investigations and threaten registration status - the most serious commercial risk an NDIS business faces. Proactive payroll compliance verification is not optional. It is foundational.
For Boards: Payroll underpayments are a director liability issue under the Fair Work Act, not just an operational problem. Organisations - and in some circumstances their directors - can be held accountable for underpayments regardless of whether they were intentional. Ensuring payroll compliance is a governance responsibility, and boards have both the right and the obligation to ask whether it has been independently verified.
Diamond Advisory has worked across NFP payroll remediation, SCHADS Award compliance, Single Touch Payroll reporting and large-scale payroll audit preparation - with the technical depth and genuine sector experience to find what is wrong, fix it properly and put in place the processes to keep it right.
No obligation. A practical conversation about your situation and what kind of support would make the most difference.
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