TUESDAY, JUNE 2, 2015
For most people just hearing the word "audit" causes a range of reactions from a simple deep breath to full on hyperventilation. But the good news is, it doesn't have to. if your customer is prepared in advance, an audit can be a stress-free, prospective experience.
How can you help your customer prepare for a workers' comp audit?
1. lf the battle is knowing which business records to have available for the auditor to review. The auditor will schedule an appointment with your customer to allow adequate time for preparation. These business records will help determine the proper classification(s) as well as verify the risk exposure(s) associated with the business.
2. Keep payroll records organized and accurate to limit the number of questions asked by the auditor. Payroll should be shown by:
- Policy Period
- Class code (list separately)
- Separate regular vs. overtime pay
3. Understand the definition of gross payroll. Gross payroll is the amount of payroll before any deductions that reduce an employee's taxable income, including 401(K) or cafeteria-style plans.
Common items included in the payroll for audit purposes:
- Wages and Salaries
-Bonuses, stock bonus plans, profit sharing
- Vacation, holiday, sick pay
- Salary reduction plans, savings plans, retirement or cafeteria plans
-Payment for piece work
Common items NOT included in the payroll for audit purposes:
-Tips, overtime, severance pay, and exercised stock options
4. Communication is a two-way street between the auditor and your customer. The business owner should be present during the audit to answer any questions asked by the auditor. the also gives the business owner an opportunity to ask questions about the audit process.
5. What happens next? The auditor will submit the audit findings to the carrier. The carrier's audit department will compare the findings to the policy to determine if the risk is as it was written and revise the policy's payroll estimate to the actual payroll verified by the auditor. If the actual payroll is higher than the policy's estimated payroll, your customer will be billed for additional premium. if the actual payroll is lower than the estimated payroll, your customer will receive a refund of premium paid.
6. Audit Disputes: if your customer disputes the audit findings, the audit can be contested by sending the carrier specific documentation as to the reason for the dispute, along with the associated back-up documentation. our audit team is ready to assist your customer in finding a solution to the dispute
Posted 1:07 PM