The Department of Labor, ERISA and other laws and regulations governing the operations of Taft-Hartley plans dictate the fund trustees’ fiduciary responsibilities in administering these plans. Baratz & Associates, P.A. developed its payroll audit program to be effective and efficient. Baratz & Associates’ recommended payroll audit procedures are designed to provide maximum coverage of employer records and creating efficiency, accuracy and confidence throughout the audit process. Our procedures are flexible enough to meet the needs of the specific contract provisions of each Plan’s bargaining agreements. Our approach to payroll auditing is to work closely with the fund’s legal counsel and the fund’s staff to assist the trustees in ensuring the plan meets the regulatory needs and needs of the participants in the most efficient and effective manner.
Our payroll audit programs vary by fund but, effective programs include procedures for selection of employers, Payroll audit procedures, and reporting to the Board of Trustees.
· All contributing employers to the plan on a three to five year cycle. An effective schedule can reduce conscious reporting errors, as employers know their records will be audited.
· All employers terminating from the plan. All terminating employers should be audited to ensure the accuracy of member benefits and that the employer has paid in full prior to leaving the trust. Accurate and up to date information will provide support to ensure accuracy of withdrawal liability calculations.
· New employers should be audited to ensure that the employer is reporting properly and reduce mistaken underreporting. This process also gives the employer the ability to understand the auditing process for a shorter time period other than the full cycle.
· Special request by the Board of Trustees. These audits can be initiated based on chronic delinquencies, suspicion from Trustees, Business Agents, members, other employers, or as support for legal proceedings.
Payroll Audit Procedures
The testing process includes:
· Review of labor management contracts (collective bargaining agreements, memoranda and letters of understanding, project agreements, etc.).
· Trust documents (subscribers agreements, participation agreements) .
· Request Employer records.
· Eligibility based testing.
· Exit interview with the employer.
The objective of the payroll audit is to review the employers books and records to ensure proper reporting and payment of participant contributions to the fund. Also, an effective payroll audit program should include steps to identify covered work being performed by non-bargaining unit members.
· The results of testing of individual employers;
· An overview of the status of the testing program; and
· Trust-level issues that require review of the trustees.
· Individual employer reports are be structured to provide the Board a summary of findings by type and a calculation of discrepancies due, including liquidated damages and interest, per the plan’s delinquency policy.