Why We Don’t Do Payroll Audits – Reason 5

Posting by Larry Beebe, CPA

“Our Union Has Strong Shop Stewards Who Know Everyone in the Union”

Are all shop stewards equally strong?  Does each employer signed to the collective bargaining agreement (CBA) have a shop steward?  Does the shop steward have enough time and authority to review the employer’s payroll records to insure that all hours worked in accordance with the CBA are properly reported?  Does the shop steward have the skill level to know whether all hours are properly […]

July 20, 2009 Payroll Audit Read more...

Formatting Tips and Considerations for Writing up the Payroll Audit

Posting by Kurt Needles, CPA

I have seen many different formats used by CPAs to transmit the results of the audit to the TPA.  I had an administrator corner me before a Trustee’s meeting and tell me point blank that they do not want payroll audits performed because each one takes hours and hours of administrative time to key into the system.  Needless to say, I assured him that our format is TPA-friendly.  Within the year, the TPA got us […]

July 17, 2009 Accounting, Payroll Audit Read more...

Audit Costs as Part of Fund’s Judgement

Posting by Andrew Staab

A recurring theme mentioned by Larry Beebe on trustee reluctance to engage in regular and routine payroll audits is COST (e.g., “It’s too expensive!” or “The cost does not justify the result.”).  My standard response to such comments is that audit costs are a recoverable expense under ERISA, specifically 29 U.S.C. §1132(g)(2).  Although the statute does not specifically say “audit costs,” it does include:

(D) reasonable attorney’s fees and costs of the action, to be paid by […]

July 10, 2009 Payroll Audit, Uncategorized Read more...

Why We Don’t Do Payroll Audits – Reason 4

Posting by Larry Beebe, CPA

“The Union Business Representatives Police all of the Jobs”

The union business representative in a given local union’s jurisdiction may be doing an excellent job at policing the jobs.  But the business representative’s primary job is to represent the union members working on the job.  The business representative is there to listen to the union member and insure that the member is properly represented in dealings with the employer signed to the collective bargaining agreement (CBA).

The […]

July 8, 2009 Payroll Audit Read more...

Why We Don’t Do Payroll Audits – Reason 3

Posting by Larry Beebe, CPA

“The Plan Has Strong Internal Controls over the Collection Process”

A plan should have a strong Internal control system over its collection process.  A plan should have a collection policy and a collection committee that insists on compliance with the collection process.

The internal control system we should be discussing, however, is the internal control system at each contributing employer which insures that all hours are paid in accordance with the collective bargaining agreement.  Each employer will […]

June 8, 2009 Payroll Audit Read more...

Common Misconceptions About the Prevention of Occupational Fraud – Part 1

John Merchant, CPA

Occupational Fraud is defined as an employee using his or her occupation for personal gain through the deliberate theft or misuse of the assets of the employing organization (see Wells, Joseph T., Occupational Fraud and Abuse, Obsidian Publishing Company, 1997). Business owners, directors of not-for-profit organizations and trustees of employee benefit plans often have misconceptions about occupational fraud and its prevention and, consequently, leave their organization vulnerable to loss.  Over the next few weeks we will look […]

May 5, 2009 Accounting, Audit, Forensic Accounting, Payroll Audit Read more...

Benefit Plan Funds Should Have a Collections Policy for Payroll Audits

Posting by Ron Chandler, CPA

I recently have encountered various types of benefit plan funds that do not have a credit or over-payment policy for payroll audits or for collections in general.  I recommend that all funds have a collections policy and include credits and over-payments in that policy. Some funds within the construction industry do not allow credits for vacation, 401k or define contribution plans, but allow credits for health and welfare and defined pension plans within some time […]

April 23, 2009 Benefit Plan Accounting, Payroll Audit Read more...

Why We Don’t Do Payroll Audits – Reason 2

Posting by Larry Beebe, CPA

“Participants Would Complain If They Did Not Get Credit”

There are some participants who would complain if the amount reported is in error.  One of our pension fund clients once received a complaint from a participant who said 40 hours had not been reported on his behalf.  Almost 2000 hours had been properly reported on his behalf.  When we did a payroll audit, we found that the employer had failed to report one week of a […]

April 22, 2009 Payroll Audit Read more...

Why We Don’t Do Payroll Audits – Reason 1

Posting by Larry Beebe, CPA

“Our Auditors Send Out Confirmations and Get No Exceptions”

Who do your auditors send the confirmations to?  If they send them to the employers, the employer would confirm what has been paid.  The confirmation does not address the amount that should have been paid.

If the confirmation is sent to a plan participant, the assumption is that the participant has kept accurate records to confirm the amount paid.  Many participants will not respond to a confirmation request […]

April 8, 2009 Payroll Audit Read more...

Why We Don’t Do Payroll Audits

Posting by Larry Beebe, CPA

We hear the excuses all the time.  Some multi-employer plans don’t do payroll audits and they have excuses as to why they don’t do them.  Here are the top ten excuses for plans not doing payroll audits:

Our auditors send out confirmations and get no exceptions.
Participants would complain if they did not get credit.
The plan has strong internal controls over the contribution process.
The union business representatives police all of the jobs.
Our […]

March 23, 2009 Payroll Audit Read more...