Finally, a “go-to” resource for Payroll Auditing.
Payroll Auditing: A Guide for Multi-Employer Plans
By Lawrence R. Beebe and Philip Vivirito
Payroll auditing guidance is lacking for professionals working with employee benefit plans who are responsible for and who perform payroll audits. Best practices in payroll auditing, procedures and methodologies of performing an audit have not been given enough focus. This book helps trustees fulfill their fiduciary duties by understanding payroll audits.
This book is published by the International Foundation of Employee Benefit Plans and is available at its [online bookstore].
| The Admissibility of the Auditor's Report: Implications of a Federal Appellate Court Decision |
| Monday, 10 October 2011 08:05 |
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Written By Travis Ketterman Whitfield McGann & Ketterman P: 312.251.9700 E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it For my next three blog entries, I will discuss important aspects of a federal appellate court decision that reviewed the admission of an auditor’s report in a trial seeking multi-employer trust fund contributions. [See Trustees of Chicago Plastering Institute Pension Fund v. Cork Plastering Co., 570 F.3d 890 (7th Cir. 2009).] Importantly, the auditor’s report was premised on the assumptions set forth in agreed-upon procedures, referred to as “assumptions” throughout the appellate court’s opinion. The appellate court affirmed the trial court’s ruling that the auditor's report was admissible. In the ruling, the court addressed several issues. First, the auditors used the company's own payroll records as the underlying basis for the report. Of course, the company did not object to the authenticity or reliability of its own records. Second, the assumptions used by the auditors were, in part, based on what the auditors found during their review of the company's records. Moreover, the auditor was subject to cross examination during the trial on the assumptions made during the preparation of his report. The company's main objections were based on the auditor receiving the assumptions in out-of-court discussions, normally subject to the hearsay rule. However, the appellate court noted that the discussions between the auditors and the trust funds were not being offered into evidence. Importantly, the court noted, "Auditors, like other professionals, are often asked to analyze data based on a set of assumptions given to them." Indeed, the court specifically cited the American Institute of Certified public Accountants Professional Standards AT § 201. The court noted that the assumptions were not a secret. The assumptions were instead a reflection of the conclusions about how the various categories of hours and payments in the company's records should be treated in assessing liability to the funds. The court stated, "The assumptions in fact were derived from what [the company]'s own records disclosed or failed to disclose about its methodology in reporting hours and making contributions” to the various funds. The appellate court also noted that the validity of the assumptions was debated throughout the trial in light of the auditor's testimony and the company's practices. It was that evidence, and not any out-of-court communications, on which the trial judge based its decision to accept some assumptions and reject others. Accordingly, the appellate court ruled there was no error in admitting the auditor's report. In my next entry, I will discuss the appellate court’s review of the auditor’s testimony at trial. |