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].
| Providing Expert Witness Testimony for a Payroll Litigation |
| Friday, 28 January 2011 11:02 |
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Written by Phil Vivirito In this case the employer , who was the defendant, was taking the position that the payroll audit completed by the funds’ accountant is an agreed upon procedures report and as such failed to meet the requirements set forth by the AICPA as an agreed upon procedures report. The employer’s attorney produced an expert witness in accounting to explain to the court all about an agreed upon procedures report. Their witness talked about the PCB checklist for agreed upon procedures, AT210 , and attestations. I was brought in to explain what a payroll audit is and to identify this audit as a payroll audit. It seems that this issue about what this particular audit is arose because the accountant’s letter to the Funds stated "we have applied certain agreed upon procedures." The employer’s attorney used this statement as a basis that this payroll audit report is an agreed upon procedures report which failed to meet the standards of an agreed upon procedures report. Their expert witness went into detail how what they considered an agreed upon procedures report was done incorrectly. As he spoke it became clear to me he was stating that the agreed upon procedures were between the employer and the auditor. At one point their expert witness was talking about making assumptions. In this audit, like many payroll audits, the auditor had to make some assumptions. For some individuals the auditor had wage information, but not hours - he had a flat dollar amount per day. The employer could not produce hours so the auditor assumed that the flat dollar amount constituted an eight hour day. Their expert stated that if you don’t have evidence you can’t do the engagement, so the auditor would need to withdraw. At this point the judge interrupted and said ‘so if the employer simply withholds all documents that means that there can’t be any attestations whatsoever.’ The witness said that the fund and auditor can come up with their own report but it’s not an agreed upon procedures report. The judge then answered back, a little irritated ‘so the employer has it solely within its discretion to completely frustrate the terms of the agreements’ The witness continued to answer questions about the audit. He stated that one could not read the report and determine how the auditor came up with the findings. Without the documentation to back up the findings no one could understand the report. When it was my turn to take the stand I gave the definition of a payroll audit. I explained how a payroll audit is conducted, what records are used, and that making an assumption is common. When presented with the payroll audit report in this case I testified that it looks like a standard payroll audit report. At one point I was asked how the employer would be able to read the audit report. I explained that the hours on the report were omitted hours. When I was asked how the employer would check those hours, I said by referring to his own payroll records. I did get pulled into the agreed upon procedures terminology fight. I explained that it’s not written anywhere that a payroll audit is an agreed upon procedures report. A payroll audit stands alone as its own type of report. I also explained that saying agreed upon procedures were used usually refers to procedures agreed to by the fund’s trustees and the auditor in the engagement letter between the two establishing the fund’s payroll audit program. It’s not between the employer and the auditor. Then the defendant’s attorney practically shouted at me: "Don’t you know half the trustees are employers so the agreement is between the employer and the auditor?" Then I explained that an employer trustee has to completely separate himself as an employer when performing duties as a fund trustee. There has yet to be a ruling by the judge. When he rules I will share it in another blog. |