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Friday, 24 September 2010 00:00 |
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Written By Phil Vivirito
Bond Beebe
P: 301.272.6090 E:
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We recently performed a payroll audit of an employer that prepared its contribution reports electronically from its payroll. Each month the employer queried the payroll and pulled out all the required information for contributions; this was the case for the entire audit period. During the pre-audit interview between the employer and the auditor, it was determined that all the correct hour types were being programmed to be reported. The auditor tested these hours, new hires, the completeness of the bargaining unit, and found no problems. The last test the auditor did was a horizontal test; taking an employee and checking hours for each week of the audit period. This test discovered hours missing in August 2008. The auditor checked another employee and found the same issue; the hours omitted for each employee were greater than a week but less than two weeks.
The auditor informed the employer of the discrepancy, and the employer was surprised as everything was done electronically. The employer went over the process with the auditor: each month a query is run and the data downloaded. The problem was that the query was input each month by the payroll clerk. In August 2008, instead of typing 8/1/08-8/31/08 to run the query, the clerk typed in 8/10/08-8/31/08, inadvertently omitting nine days by starting with the 10th instead of the 1st. With over 250 employees, it turned out to be a sizable finding. The problem was not with the program, but turned out to be old-fashioned human error. |
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Friday, 30 July 2010 12:26 |
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Written by Phil Vivirito
Bond Beebe
P: 301.272.6090 E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Having electronic records sent to your office either works wonderfully or is a complete bust. An Excel file that you can verify contains all the payroll information you require will be the most efficient way for you to complete the audit in your own office. However, once you start getting into file formats that are difficult to manipulate, reports that do not provide all the information you require or reports that are incomplete or sketchy – you will have a problem. The time it takes to review this type of information and the back and forth with the employer to obtain the report you need usually delays the completion of the audit and just adds time. Your total time may even become greater than the expense of a site visit!
If the employer cannot provide the pay records you require for a timely and efficient audit completion, I recommend foregoing having records sent and instead plan the site visit to the employer. Another option to consider is what I call a hybrid-site visit, which is a site visit that includes using electronic records in your office. For a very large employer, going on site, then testing and determining what type of electronic report will work for you, may be the optimal solution.
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Thursday, 22 July 2010 12:46 |
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Written by Phil Vivirito
Bond Beebe
P: 301.272.6090 E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
An employer may also send you an electronic copy of one of their payroll reports that are provided by their payroll processor company. This may not work for you at all. You may be sent a report that shows wages and deductions, but you need hours. Handle this on a case by case basis. If you cannot get a report to suit your needs, having an employer send this type of report will waste your time. You should be specific in what you need ahead of time, and if the employer’s electronic reports from their payroll company do not fit your needs, then a site visit may be required. |
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Friday, 16 July 2010 09:17 |
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Written by Phil Vivirito
Bond Beebe
P: 301.272.6090 E:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Some employers will customize a payroll report for you. They may be able to provide it as a text file, and Excel file, or as a PDF. It is important that you are clear and precise in what information you require in this report. You as the auditor must tell the employer what should be in it. I have seen instances where employers omit pay codes or individuals from these reports because they feel that those pay codes or individuals should not be reported. The rule of thumb when using a custom report should be that all wages are included (even if you are auditing hours) for each employee. Then request W-2s for some or all of the employees and reconcile the gross wages on the custom report to the W-2 for some employees. If you cannot reconcile them, there may be pay codes omitted. |
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Page 9 of 11 |
Payroll Auditing: A Guide for Multi-Employer Plans