Hiring a Payroll Auditing Firm, Question 6: How Long Does Your Typical Audit Take?

Posting by Larry Beebe, CPA

As part of this series, I am providing Plan Trustees with a list of questions they should ask when requesting proposals from payroll auditing firms.  Click here to view the full list of questions.

The amount of time required to perform a quality payroll audit varies considerably.  For example, the audit for a company with 30 employees should be scheduled for one half day.  Normally, in this half day, the auditor will be able to do a 100% audit of all hours paid to all employees.  Scheduling the audit of smaller employers for one half day can result in two audits being completed in one day.

For larger employers, the audit normally does not take more than one day – particularly if no deficiencies are found in the day’s work.  If deficiencies are found, the auditor expands the job to capture all of them.  An audit of a large employer with many employees and substantial findings might take 200 hours or more.

The point that must be emphasized is that a payroll audit where no deficiencies are found should only take one day.  By the end of the day, the auditor should have done enough testing to identify deficiencies typically made by the employer. For example, an employer may not report vacation hours paid.  The auditor should expand testing to audit all vacation hours paid in the period being audited.  This may mean coming back to the employer for a second or third day.

Coming back for a second day when no deficiencies are found on the first day is normally a waste of time and money.

For more in this series, see:

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