Written by Kurt Needles
Needles & Associates
P: 303.430.4225 E:  This e-mail address is being protected from spambots. You need JavaScript enabled to view it

There are times when a payroll auditor in the field needs to decide to stay and review the records received, or leave the company. The best action may be to get kicked out, but it’s a tough judgment call.

The situation occurs when the auditor has correctly followed all the pre-visit procedures. The auditor communicated lists of records needed, time period, purpose and time of visit. When showing up at the company, he/she is only given the payroll for the “union” employees. When the auditor asks for the entire payroll they are told one of the following stories: “That’s all my boss told me that you can see.”; “You have no legal right to see any other information.”; or, “They did not know that you needed to see it all and therefore they did not have the records available.”

This is where the auditor needs to decide whether to review the records received or wait for the entire payroll to be released. It is critical how the auditor reacts.

If the auditor accepts the information and then leaves assuming that he/she will go back to their office and report the lack of records to their manager, they could be complicating the situation. First, they have not obtained enough information to write any report, and the company believes that they complied with the auditor’s request for records. When the employer receives a demand letter from the fund, they will claim harassment. Some Trustees may side with the employer and question the audit firm. There also may be some pressure from the union to write up the report with just the information received.

The auditor is independent of both sides of the table, labor and management. The job of the payroll auditor is to deliver a report that accurately reports hours of covered employment worked in qualifying employment for the trustees to act upon. Collection is a management function, not an audit function.

The way I view this situation is as follows: If the employer is going to release the remaining payroll and has not refused, then the auditor should stay and get started on the audit. There needs to be some written understanding that the rest of the records will be released.  If there is no way of receiving the entire payroll, the auditor should politely demand all the records referring to the confirmation letter sent prior to the visit.  They should not budge on their request and sooner or later the employer will ask them to leave. This leaves no doubt what the auditor wanted to see.

The auditor should explain in a very matter-of-fact way how the situation will play out. When this is explained the employer may say that they are being threatened, but this scenario has played out many times and they need to understand the process: the audit firm will report the refusal to the fund/trustee or legal counsel.  The employer will then receive a call or demand letter from the fund. If the employer does not respond, then they will be sued for the records and finally the audit will be performed with all records being obtained. If the delinquency procedures allow, they will also have to pay for the audit regardless of the results of the audit.

You hope they will listen to reason, but most of the time, the auditor has time to kill.

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