A Payroll Auditing Webcast

Posting by Larry Beebe, CPA

I recently participated in a webcast for the AICPA on multiemployer plans.  One of the questions submitted by a participant but left unanswered, due to time, was a multipart question on payroll auditing.  Here is how I would have answered that question:

  1. What have you found to be the most difficult aspect of payroll audits?

Often the most difficult decision a payroll auditor must make is deciding when to wrap up the audit.  Factors that should be considered in making this decision are:

  1. Is all testing complete?
  2. Has the scope of the audit been sufficiently expanded when errors have been discovered?
  3. Were all necessary records available for testing?
  4. Has the employer appropriately answered all of the auditor’s questions?
  5. From a cost-benefit relationship, should the audit continue?

I would like to know from the readers of this blog if there are other factors that should be considered in deciding whether to wrap up the audit?

  1. How do you effectively and efficiently audit a contractor that may employ and report to multiple plans and jurisdictions?

Ask for copies of remittance reports for the other plans.  For any employees listed on those reports, the payroll auditor can eliminate testing.  The only exception would be in those situations where two crafts are claiming the same employees.

2. Do you often see special pay arrangements for union members in management positions and how do you clear those arrangements with the local union and related parties?

If you are a union member and are promoted to management, you are no longer a part of the bargaining unit, and should not be reported.


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