Data validation and testing data validation is a

DATA VALIDATION AND TESTING
Data validation is a process designed to verify the integrity of data for accuracy and consistency. Create
reports to validate that all required fields have been accurately populated with new employee personal data.
Payroll test, or parallel, runs should be processed to determine whether earnings and deductions are
calculating correctly. When pay frequency changes are not required, validation can be done against a
previous payroll register report.
During the validation and testing phase, it is recommended that compliance audits are conducted on both
the existing and the new payroll set-up. It is not uncommon for an organization going through a system
conversion to discover errors in existing calculations or payroll allocations.
The CPA recommends using the CRA’s Payroll Deductions Online Calculator to verify calculations for
accuracy when a new pay frequency or updated calculations are being initiated.

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RECONCILIATION: CLAWBACKS OR PAYOUTS
Employees whose employment is terminated or who are subjected to changes in employment conditions
as a result of the M&A may have outstanding payments owed to them, require deductions to be reimbursed
or have to reimburse amounts to which they are no longer entitled. There can be several reasons behind
such situations, often related to qualifying criteria under a contract of employment. For example, if an
employee was given a sign-on bonus upon hire and the period of required continuous employment was not
met, a percentage may have to be clawed back.
Here are additional examples, which may result in possible claw backs or payouts:
• Sign-on/retention bonuses
• Tuition fees, bursaries, continued education bonuses
• Estimated allowances reconciliation
• Estimated taxable benefits reconciliation
• Stock options or employee stock purchase plan
• Loans, cash advances and draws
• Advanced vacation pay
• Expense report submissions and advances
FINAL SIGN-OFF ON DATA
Once you have completed your analysis of files and records, loaded your employee information and
completed your parallel testing, ensure that you have final sign-off on the following:
• Employee profile listing
• Employee banking information
• Employee salaries and wages
• Employee balances/accruals
• Parallel testing
• Final testing
• General Ledger
Proper sign-off will ensure that the integrity of your data is compliant and correct. Not only is this
necessary, but it will also prevent incorrect payments and overpayments to terminated employees.
Separation of duties is required for this function to prevent fraud.
RECORD OF EMPLOYMENT
The Record of Employment (ROE) form must be prepared every time there is an interruption of earnings,
regardless of whether or not the employee will be filing a claim for benefits. There are also some special
situations that require ROEs during M&A activities, such as a change in ownership and/or change in pay
frequency.

20 Mergers and Acquisitions Guidelines
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Change in Ownership