What Records Must I Furnish for the Audit?
To complete your fund year audit, the auditor must have access to all pertinent payroll records including, but not limited to the following:
- QuickBook Reports: Payroll Summary
- General ledger
- W-3 & W-2’s
- Individual or business tax returns (940, 941, 943)
- Unemployment reports
- Quarterly tax reports
- Copies of your 1096 & 1099’s
- Internal Reports used during the policy period.
At least two (2) of these sources must be available to properly verify your remuneration OR your audit will be considered unobtainable.
If your audit is performed with your CPA or accountant and you are not present, it is imperative that ALL available records, as outlined above, are provided. If your CPA or accountant does not have all available records at the time of audit, your audit may be considered unobtainable.
Certificates Of Work Comp Insurance
You must furnish proof that each subcontractor used during the policy period had insurance coverage in force for the policy period or that payroll was reported for the work performed. You should make certain the certificates correspond to the time frame worked by the individual subcontractors.
Certificates of Insurance should be obtained from subcontractors prior to their work beginning on any of your jobsites. If you are not certain that the certificate is valid, contact the agent or company shown providing the coverage on the certificate. This preventive maintenance can alleviate numerous problems for you at audit.
If you hire subcontractors from out of state, it is imperative that you verify that their insurance covers their employees for work performed in Louisiana. If the sub does not have valid workers’ comp insurance for work performed in Louisiana, you will be responsible for the workers’ comp premiums for these workers. Again, if you are unsure, contact the agent or company shown as providing coverage on the Certificate Of Insurance or contact our office and we will verify the validity of the certificates.
The extra pay for overtime is excluded from payroll on which your premiums are determined, provided your records are maintained properly. We ask that overtime pay is separated so we can convert overtime pay to regular pay. The conversion is as follows: if time and a half is paid, then one third of this total is excluded. If double time is paid, then one half of the total is excluded.
Class Codes, Materials And Labor
Contract Labor – These individuals are considered “employees” and their payroll should be reported at 100%, using the classification that best describes the operations of your business.
Miscellaneous Labor – Including H2A workers (Immigrant workers). These individuals are also considered “employees” and their payroll should be reported at 100%, using the classification that best describes the operations of your business. Workers that perform various jobs throughout the day are also properly classified in the same manner.
Subcontractors – This payroll is properly classified to the code that best describes the work performed by the subcontractor.
Invoices – If detailed invoices are obtained, clearly separating materials purchased and labor attributable to a job, then the labor amount will be used as the payroll, subject to certain limitations for each class code. If details are not provided to the auditor, a percentage will be assessed to the contracted amount for payroll if a Certificate of Work Comp Insurance is not provided.
Proof of payment for each contractor, in the form of a 1099, should accompany your completed audit paperwork. Along with the 1099, the member should list a brief description of the job preformed by the contractor (ex: Hauling, labor, custom harvesting, repairs, etc.)
We Are Here To Help
If you have questions at any time during the audit process, please contact us at 1.800.798.2999. We would be glad to answer any questions you may have.
Additional document for help completing payroll audit worksheet: