Hiring a Payroll Auditing Firm, Question 14: Should Payroll Audits for all Employers be Random or Should They all be “for Cause” Audits?BondBeebe
Posting by Larry Beebe, CPA
Some audits should be selected for cause. Factors such as participant complains, whether the employer is new, whether the employer is terminating a relationship with the plan, and dramatic difference in contribution levels from month to month or over time should determine which employers are targeted for an audit. One “for-cause” audits are selected, the remainder can be selected at random or over a cycle.
Random audits should be conducted when the size of the plan makes it impossible to audit all employers in a three or four year cycle. Random audits insure that all employers have a chance of being selected for audit.
For more in this series, see:
- Question 13: What is the Typical Time Between the Assignment of a Payroll Audit to the Auditor, and it’s Performance and Delivery of the Audit Report?
- Question 12: Do you Charge for Travel Time?
- Question 11: Will we Receive Progress Reports?
- Question 10: Do you Change a Flat-Rate Fee per audit or an Hourly Rate?
- Question 9: Have you Done Payroll Audits for our Industry or Similar Industries?
- Question 8: Do you Have a Dedicated Payroll Audit Staff?
- Question 7: What are the Qualifications of Your Payroll Audit Staff?
- Question 6: How Long Does Your Typical Audit Take?
- Question 5: Do You Audit All Employees %100 or Do You Test Employees?
- Question 4: What is the Relationship Between Your Audit Findings and Your Audit Costs?
- Question 3: How Many of Your Payroll Audits do you Perform?
- Question 2: How Many Audits do you Perform?
- Question 1: How Many Years Have you Been Doing Payroll Audits?