Payroll year-end reconciliation: a Sri Lanka playbook

Year‑end reconciliation can be calm and predictable if you bake in discipline each month. The goal is to tie out people data, attendance, and pay to what was actually approved and filed, with a clear audit trail. You get there by doing a mini close every month, then gliding into year‑end with no surprises.

Reconciliation matrix. Build a simple matrix with lines for headcount, base pay, variable allowances by type, deductions, EPF/ETF contributions, taxes, and employer costs. For each line, specify: source report, reviewer, variance threshold, and sign‑off date. Use last month and last year comparisons to catch anomalies.

Cut‑off discipline. Lock changes after payroll approval. Any post‑approval corrections should be documented as out‑of‑period with maker‑checker approvals. Track the count and reason codes—if you see too many late changes, fix the upstream process (onboarding, attendance approvals).

Data lineage. Record where each number came from: device logs for attendance totals, HR system for allowances, payroll engine for net pay and contributions. Export checksums so finance can verify that the data loaded into the GL matches what HR approved.

Artifacts and retention. Archive signed summaries, payslips, EPF/ETF exports, remittance proofs, and device logs in a single repository with access control. Keep at least three years of history. Label folders consistently by year and month—future audits become a search, not a hunt.

Communication plan. Publish a year‑end calendar with HR and finance: cut‑off, calculation, review, payment, filings, and audits. Assign backups for each role. Keep a risk register—known complex cases, ex‑gratia, or policy changes—that may create variance.

Final tie‑out. In the last quarter, raise the bar: do a quarterly tie‑out of contributory bases, EPF/ETF totals, and tax withholding to date. Resolve any breakages before December so the December run is just another month, not a fire drill.

Continuous improvement. After close, run a short post‑mortem. Which variances were avoidable? Which fields should be required? Can the HR system validate formulas and prevent common mistakes? Ship small automation wins every month.

With this approach, year‑end becomes a non‑event. Teams spend their energy on planning and hiring, not reconciling spreadsheets at midnight.