Finally, a “go-to” resource for Payroll Auditing.

bookPayroll 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].

“How To” Series: Putting New Hire Records to the Test – Verifying Accurate Employer Reporting
Monday, 06 June 2011 11:33

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

Over the next few weeks, Phil Vivirito, Bond Beebe’s Director of Payroll and Compliance Auditing, will explain several fundamental payroll auditing principles.  This week he reviews the best practices for ensuring that new hires are properly reported.

Verifying that an employer is correctly reporting new hires should be a relatively simple task. However, you should be thorough and efficient in your methods and may need to apply different strategies if the appropriate information is not available.

Prior to leaving for the audit, you can use the contribution reports to identify employees who appear to have started working during the audit period.  A list of these names can then be provided to the employer, requesting their hire dates.  After receiving the hire dates:

  • Check to ensure that the employee appears on the contribution report in a timely manner.  This can be done simply by looking at the hire date and matching it against the contribution report.

  • Next go to the payroll, even if the contribution report shows that the hire dates coincide with when the employees are being reported.  This step is important because it will establish the validity of the hire dates.  I have seen instances where the hire date provided is actually the date the employer first started to report the employee, or the hire date is the date the employee joined the union or completed his/her probationary period.  It may also indicate a rehire date, which may affect how the employee should be reported.
You may also want to obtain a complete listing of all new hires from the employer.  You can use this in the same way as you would use the list of names you provided to the employer.  Additionally, when you are doing your population test, you will find employees who were hired during the audit period.  If you have hire dates for these employees, you can utilize the same testing methods mentioned above.  There will also be instances in which hire dates are unavailable. In these cases you may have to assume that the first time an employee appears on payroll, s/he is a new hire, and treat those cases accordingly.

After identifying new hires, you will determine whether or not there is an audit finding associated with them.  The simplest scenario is when contributions are due from the date of hire – the first day worked is the first day reported.  If there is a waiting period, you will have to verify that the employer is implementing it correctly; a discussion with the employer should be the starting point.  You should be able to determine from this discussion if the employer’s understanding of when to report new hires is the same as the parameters laid out in the collective bargaining agreement.

By utilizing the proper methodology and asking for the correct reports and documents, verifying new hires can be a relatively streamlined and effective process.