Written By Larry Beebe
Bond Beebe
P: 301.272.6025 E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

“It is a Waste of Plan Assets to do Payroll Audits”

I would agree that a plan can waste plan assets in performing payroll audits.  An ill conceived and/or poorly executed payroll audit program is a waste of plan assets.  I do not believe, however, that a well conceived and well executed payroll audit program is ever a waste of plan assets.

What can the trustees do to insure that they are spending plan assets properly in their payroll audit program?

A payroll audit program should, in most instances, collect more in indentified delinquent contributions than it costs.  Annually, the trustees should compare delinquencies identifies and collected against audit costs.  If the amount collected as a percentage or as an absolute dollar amount is going up from year to year, then more payroll audits should be performed.  If the amounts are narrowing from year to year, then less payroll audits should be performed.

A payroll audit program that audits every employer every 3 or 4 years is also not a good idea.  The employers who are honest are being audited too frequently, and the employers who always have delinquent amounts identified are not being audited frequently enough.

The trustees should spend time each year evaluating the payroll audit program.  A successful payroll audit program should, from a monetary point of view, be worth the effort.

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