Tips for Using Electronic Records

Posting by Phil Vivirito

There are many times when an employer will send electronic records, as well as times when an employer will provide electronic records to the auditor in the field. Here are some useful tips to help ensure you have the correct records for your audit.

Records are usually received in a PDF format or non-PDF format which include Excel, Word, or text file.

Whichever format you receive documents in, it is best practice to make a copy of them. This copy will be your working file, the original should be saved and password protected. If any issues arise with the records you can always refer to the original file.

Non-PDF format

If an employer provided you with an Excel file or a text file how do you know that you have the correct payroll? The first thing you should do is determine the source. Did the employer run a query from its payroll or accounting software, or did the employer create an Excel spreadsheet just for the audit? Question the employer about this. A query from payroll is acceptable, but an excel spreadsheet created just for the audit is not.

No matter what the contribution basis is, ask for the W-2s and the W3. Take a few individuals and reconcile their wages to their W-2s. If the wages do not reconcile then you could assume that the query may have been run incorrectly or that the employer may have decided to omit a pay code that they feel should not be reported. With this proof you can now question the employer, find out if it was an error or a deliberate omission and take the appropriate course of action. With an Excel spreadsheet it should be relatively easy to sum the wages for a year and reconcile that to the W3 for that year. If that doesn’t reconcile, you can question the employer as to why and then take the appropriate course of action.

PDF Format

First determine the source of the PDF file. It may be the actual payroll in a PDF format, it may be a query from payroll saved as a PDF file, or it may be an Excel report from payroll saved as a PDF file. If it appears to have been created in Excel ask the employer if they can provide the Excel file. Whether the employer can or cannot provide it in Excel, ask for the W-2s and the W-3 and preform the same steps as discussed earlier.

If the records look like the actual payroll there are a couple quick tests to do in order to determine what you actually have received from the employer.

One, look for a date on the pages of this payroll. You are looking for the run date. If the date corresponds to the payroll year: for example, payroll for week ending 12/3/11 may have a run date of 12/10/11 or a run date of a month or a quarter after the week ending date, you could assume that this was not created for the audit and is the actual payroll. As opposed to seeing a run date close to your audit date. Question the employer as to the payroll source.

Two, check page numbers. If there are page numbers and some are missing, you can assume that the employer has pulled our certain employees. If you think the records are incomplete or suspect, question the employer and take the appropriate course of action.

Just as with the Non-PDF format records, I would request the W-2s and the W-3. You may reconcile a few employees W-2s to the payroll received, and if the payroll has a total page you can reconcile that total to the W-3. If there is not a total page you would need to determine if you have the entire payroll. If you determined that there are no missing weeks or missing pages and individuals wages that you tested reconcile to their W-2s, a good assumption is that the payroll is complete. If you have doubts then add it up, you may be able to convert it to an Excel file to do so.

With so many employers providing electronic records, we have run into a few issues of missing employees’ payroll and missing pay codes. There will continue to be issues that need new solutions.

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