My Company Received an Payroll Audit Notice, What Do We Do Now?

This is one of the most popular questions that we receive about the Workers Compensation premium process. A workers comp payroll auditor contacting a company can make for a stressful situation. From what I have seen, the word audit tends to make someone feel they have done something wrong.

A payroll audit is just what it is - an audit of your company's payroll to make sure that your company has paid the correct premium. I think the word "correct" should be changed to "more." Unless there is a reduction in payroll, almost all audits we have seen either leave the premium "as is" or increase the premium owed.

There are a few things your company can do to make the audit process easier:

• Have concise and complete records available. The auditor may ask for "everything." Request a list of what is needed for the auditor. Provide no more or no less than the requested amount of records. Spreadsheets are an invaluable aid.
• An audit is a contentious situation. Try to be as congenial as possible.
• Do not be intimidated. This seems to be a pattern of when we are called in at the end of a workers comp audit. We have seen the auditors try to intimidate the employers more now than in the past.
• While the audit has to fit in the auditor's schedule, the audit also has to fit into your company's schedule. As indicated in the last post, do not refuse the insurance company's auditor access to the records. As with any type of audit (tax, insurance, etc) the refusal may send a red flag that there is something amiss.
• Ask the auditor at the end of the audit to provide all workpapers that had to do with the audit. You have a right to have a copy of them, as they are the basis of your audit.
• Make sure that the auditor knows who is a sub-contractor, temp, volunteer or any other type of worker besides the normal positions.

The first time that someone has to go through a workers comp payroll audit can be a very tense situation. Good luck with the audit. If you feel uncomfortable, it may be good to call in an expert.

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