Payroll Audit – More Used Term Premium Audit
A payroll audit for Workers comp is actually not a fully accurate term. The term also known as a premium audit. Actually, either term is correct. A payroll audit may also be called a policy audit.
This blog has provided many articles on the premium audit process. Feel free to search for the term premium audit or click here. The search results rank the relationship to the search words.
This is also referred to as a premium audit. Your policy contains a summary of the rules on when and how your company may be audited by your current or prior insurance carriers. Reading your policy before questioning or disputing an audit may save your company time and headaches every year. The premium audit workpapers may also be very helpful.
In Workers Comp the in surer will send an auditor (subcontractor or staff employee) to examine/audit the remuneration reported by the insured. The purpose is to determine if the premium is adequate and covers all employees. There are many posts in this blog on payroll or premium audits.
You may find them by using the search box on the right side of the web page. The key to any audit is having data to provide the premium auditor that is concise and complete. The payroll figure accuracy is tantamount to have a successful audit.
Microsoft Excel is always the best way to organize the data into nice spreadsheets. The premium audit department will usually send an audit notice letter approximately one month prior to the audit date.
If you cannot meet the auditor on the proposed date, call the audit department as soon as possible. Emailing the auditor remains the best way to reschedule a premium audit for documentation purposes.
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2 Responses
The comments on the payroll audit and it’s purpose are a good start; however, the audit has two primary purposes. In addition to verification of the correct amount equally important is the correct payroll classification.
Be prepared when you commence the payroll audit. Do not just have with you the names of individuals and the reported payroll. To continue the discussion, what else should you have with you?
I start the list with any and all claims for that employer together with brief description of the injury and the payroll classification shown. Regards Ray Neff
Regarding “Claims will not be paid for claimants discovered not to be included in the payroll.”
Claims are a double edge sword for an employer. If claimants are not on the payroll, then red flags pop up for me. I look further at general ledger accounts, 1099’s, cash payments, etc to determine if the the chargeable payroll (including subs) is being altered in any way to reduce the premium on the policy.
Can claims be miscoded to the wrong employer, Yes, but it is very rare. Claims will be paid to anyone who is injured regardless if they are paid as an uninsured subcontractor or paid on a cash basis under the table.
Thank you, Carlos Garcia