Posting by Phil Vivirito

A few months ago, I shared my experience as an expert witness for a multi-employer benefit fund at a non-jury trial in Federal Court.  The case was recently decided in favor of the Funds (plaintiff).

The employer’s only defense was that the payroll audit was not actually conducted, but rather the accounting firm issued an “agreed-upon procedures report.”. To this the judge wrote in his ruling:

Much of defendant’s case during the inquest focused on the assertion that an audit was not actually conducted and issued in this action, but rather AHM issued an “agreed-upon
procedures report,” which defendant contended was substantially different than an audit. The rebuttal testimony by plaintiff’s expert, Philip Vivirito, a senior manager with Bond Beebe Accountants and Advisors, established that while there is a significant difference between a payroll audit and an agreed-upon procedures review, the reports issued by AHM are essentially payroll audits and not agreed-upon procedures reports, despite the use of the “agreed-upon procedures” terminology by AHM. (1/14/11 Tr. 37-40, 45.)

The judge also pointed out in his ruling that the employer did not carry its burden by presenting evidence to dispute the audit findings. The judge wrote the following:

RRZ Trucking has failed to sustain its burden. While RRZ Trucking spent a great deal oftime during the inquest proceedings challenging the terminology used to describe the audit performed – i.e., whether it was an audit or an agreed-upon procedures review – and arguing that it was not supplied with all of the information necessary to determine whether the audit’s findings were accurate, it failed to produce any evidence that raised a genuine question as to the accuracy of the audit performed or Mr. Bamberg’s testimony. Moreover, RRZ Trucking failed to present any evidence that disputed the audit’s findings regarding the amount of delinquent contributions due and owing, despite having been in possession of both audit reports for approximately two years prior to the inquest proceedings and having control of all of its books and records.

The full court decision can be read by clicking here.