Posting by Larry Beebe, CPA

Some audits should be selected for cause. Factors such as participant complains, whether the employer is new, whether the employer is terminating a relationship with the plan, and dramatic difference in contribution levels from month to month or over time should determine which employers are targeted for an audit. One “for-cause” audits are selected, the remainder can be selected at random or over a cycle.

Random audits should be conducted when the size of the plan makes it impossible to audit all employers in a three or four year cycle. Random audits insure that all employers have a chance of being selected for audit.

For more in this series, see:

• Question 13: What is the Typical Time Between the Assignment of a Payroll Audit to the Auditor, and it’s Performance and Delivery of the Audit Report?
• Question 12: Do you Charge for Travel Time?
• Question 11: Will we Receive Progress Reports?
• Question 10: Do you Change a Flat-Rate Fee per audit or an Hourly Rate?
• Question 9: Have you Done Payroll Audits for our Industry or Similar Industries? 
• Question 8: Do you Have a Dedicated Payroll Audit Staff? 
• Question 7: What are the Qualifications of Your Payroll Audit Staff? 
• Question 6: How Long Does Your Typical Audit Take? 
• Question 5: Do You Audit All Employees %100 or Do You Test Employees?
• Question 4: What is the Relationship Between Your Audit Findings and Your Audit Costs? 
• Question 3: How Many of Your Payroll Audits do you Perform? 
• Question 2: How Many Audits do you Perform? 
• Question 1: How Many Years Have you Been Doing Payroll Audits?