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Audit Report
THERE IS NOTHING TO FEAR!
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COMP AUDIT
REPORT
Comp
auditors are human—they are not all geniuses
They will look at what you show them—if you are not prepared
they will not go one step out of their way to help you—they are
not mean, they only lack the energy and time to help you personally.
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You may be wondering, "Why
do I have to be bothered with this at all?"
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- Your comp policy is elastic—it stretches and shrinks to meet
your needs and reflect your activity. Believe me, you would not
want it any other way! This elastic quality means that at the
end of a policy year the company has the right to go back and
look over what you did and CHANGE THE PREMIUM TO REFLECT YOUR
ACTIVITY.
- The audit process lets you go about your business during the
course of the year and pay the freight at the end of the term.
No worries about reporting a job as you go as long as you stay
in your state. Your work will be covered by this elastic policy.
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WARNING! Most people don't know this! Comp policies have a 3-year
"Look Back Window." Your company can look into your
records dating 3-years back and conduct an audit. This is not
uncommon. I have personally seen it happen.
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ARE TWO KINDS OF AUDIT—PHYSICAL AND VOLUNTARY. IN A VOLUNTARY AUDIT
YOU SEND IN YOUR INFO ON THEIR FORM—I LIKE THIS ONE! |
| AUDIT MECHANICS
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There are three basic things
the auditor will want to do during the audit:
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- Your policy is based on payroll—so the auditor will want to
get the payroll information for your business from a reliable
source. Count on having to provide your completed "941's"
(your federal payroll tax returns).
- DANGER! He may also want to see if your employees are "properly
classified." If your payroll is listed as "clerical"
and you work on the job site— you will be re-classified. THE RATE
FOR CLERICAL PAYROLL IS ABOUT $0.26. THE RATE FOR CARPENTERS IS
BETWEEN $7.00 and $10.00. RECLASSIFICATION CAN BE DANGEROUS TO
YOUR BOTTOM LINE!
- HAVE ALL INSURANCE CERTIFICATES ON HAND AND KEEP COPIES! if
you don't have certificates all the payments you made to subs
will be charged as direct payroll to you
- You can be sure that the results of this audit will be applied
to your next policy. So, if your payroll took a temporary jump
because of a once in a blue moon job—be sure it gets noted! If
not, then your next policy will include that jump!
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HAVE YOUR STUFF
READY—MOST AUDITORS WILL BE HAPPY TO TAKE WHAT YOU GIVE THEM AND
GO. YOU CAN HAVE THEM OUT IN 10 MINUTES.
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SUMMARY
The auditor will try to verify your payroll from
the last year
Have your payroll tax returns ready—If you don't have them, then get
your payroll service summaries. If you don't have them then the auditor
will go through your checkbook—AVOID THIS AT ALL COSTS! Everything
is open to interpretation and I've personally seen auditors take payments
to lumber yards and call it PAYROLL!
The auditor will be looking
to re-classify your workers.
Know your lines! If you classify yourself as payroll
don't talk about working on the job site… If you do mainly job site
supervision—say so. BE CONSISTENT!
The auditor will classify subs
as your employees in a heartbeat.
Have certificates for ALL SUBCONTRACTED WORK. I don't
care if it's YOUR BROTHER. Take the certificates and wave them in
the face of the auditor and MAKE SURE YOU HAVE COPIES!
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Do
not lie
You can do plenty to help yourself while staying
in the bounds of truth. I never counsel a customer to lie. Its wrong
and its bad and it will come back to bite you on the behind
One should never lie, however, we should know the rules and be aware
for what we are accountable. Take the advantages available to you.
The insurance company will do the same. To think or do otherwise is
to be a dreamer. One of the advantages of working with an Independent
Insurance Agent is that you can get real world unbiased
information when you need it. Call me if you need help!
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WHEN
ALL ELSE FAILS
In the event of an audit outcome that you think is flat out unfair
and wrong—there is a process that will STOP
ALL BILLING DEAD IN ITS TRACKS AND FORCE A RESOLUTION BEFORE ANY PAYMENT
IS MADE! |
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