Each payroll audit includes certain tests, such as: Are new hires reported correctly? Are all pay periods accounted for? Are vacations being reported correctly? There are a few questions that the payroll auditor can ask an employer which can direct the auditor to test specific time frames in the audit period, which can lead to a finding.
Ask the person preparing the contribution reports if he or she has been doing so for the entire audit period. If there was a change in personnel, find out when the change took place and test that month. If the same person has been preparing the reports for the entire audit period, ask if he or she was out for an extended period and did not prepare a report or two. During a recent audit I had a finding in the month that the person preparing the contribution reports went on a month long vacation!
Ask if the employer had any kind of shut down during the audit period. Either a planned shut down or an unexpected one due to weather for example. Then check if anyone was paid during the shutdown. Some employers may run with a skeleton crew during a planned shutdown or paid vacation to some or all the employees. Sometimes employees use vacation for weather or emergency shutdowns. I have found instances where the vacation which should have been reported is not, because the person preparing the contribution report just wrote “no work plant shutdown” on the contribution report.
If you’re unsure what other questions to ask or would like more information around payroll audit concerns, fill in the form below and a member of our team will be in touch.