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Human Resources

The Auditors are Coming! (Do you have a plan?)

Hey Compliance Warriors!

The Auditors are Coming! (Do you have a plan?) Read on as one of our members and guest blogger gives some amazing tips for preparing to meet YOUR auditor!

You just got a notice from the DOL, OSHA, IRS, USCIS (ICE)or other government agency that they are coming to audit you, what should you do?

Here’s a few tips:

Remain calm, with a sense of urgency.  Now is the time to keep your wits about you.  Read the notice and gather as many details as possible. Who, What, Where, When, Why?

Consider who else you need to notify. If your company has Employment Practices Liability Insurance (EPLI), this insurance carrier may be one of your first calls, your Accountant, your Employment Attorney, other Departments, CEO or Company Owner.

It’s time for you to go on the offensive.  Part of your strategy will be to gather as much information in advance of the audit. You can minimize your company’s exposure by only providing needed documentation and limiting what the auditor can see and touch.

Here’s a list of 9 questions you should ask for to help minimize your organization’s exposure.

  1. Who will our auditor be? Call up the agency, identify your Auditor and introduce yourself. Confirm everything you think you know…. Now it’s time to gather some intel.
  2. What started the audit? What is the focus of the audit? This is a scope question. What is the purpose of the audit? How was your company identified? Is it just one department or location or will it be expansive?
  3. What specific documents will you need? Ask a list of documents required to be emailed to you from your auditor. You want to have everything prepared in advance. (Only provide documentation requested and nothing more.)
  4. How long will the audit take? If you negotiate this up front it is much more likely the auditors will respect the time you’ve both agreed upon. This will also give you an indication on how big of an audit this will be.  Opening bid.  “I need to reserve conference space, will 3 hours be enough?”  If the Auditor says, “yes” great!  If they say “no, we plan to be there 2 days or 2 weeks”… you have great intel on how in-depth this audit will be.
  5. Can we move the meeting to ___________? Since, 2007 Federal and State Agencies have been working together under a formal memorandum of understanding called the QETP “Questionable Employment Tax Practices” Initiative. [1] So if the DOL comes in to do an audit and they see a safety violation, realize that they are also working with their counterparts at other agencies like OSHA, the more they see and touch the more likely they will have something to report to their counterparts, and you’ll soon find yourself getting a visit from another agency. One way to limit exposure is to move the meeting.  “Where should we move it?” You ask. Anywhere out of your company!  Good places include; your CPA’s office, your Employment Attorney’s office, a library, hotel, any private space off site including the Auditor office.  Some agencies are now Skyping audits.
  6. Can we have an extension? Don’t assume that you will get one, in 2019 the EEOC said they were not giving extensions.[2] But as your Mama told you “If you don’t ask you don’t get.”
  7. Could we do a sample? If the Auditor requests 3 years of payroll records ask “can we do a sample.” This will save you time and limit your exposure.  (If the Auditor agrees to 1 year of records – that’s a 66% win!)

While participating in the audit keep advocating for your company.

  1. Can we have a plan of correction? If the auditor does uncover an issue, request a plan of correction this will give you a little window to fix up the issue and minimize penalties.
  2. Can we have a copy of the “working papers” aka the penalty calculations? This is the document the auditor creates that linked violations with penalties.  This may prove helpful as you are negotiating a plan of correction but often auditors make mistakes too.

One of the best ways to minimize exposure is to conduct internal audits and document your “Good Faith”.[3]

It’s time to audit your payroll processes for legal compliance and resolve issues before an audit or lawsuit.  Don’t know where to start? HelpDesk has audit checklists.

Too much on your plate already? Want to outsource the audit so you can demonstrate Good Faith, keep your employees’ confidence and sleep better at night?

Contact us!  support@beauditsecure.com

Becky Stauffer, MPA, SPHR, SHRM-SCP

National Speaker and Trainer on Payroll Law

Work4Accord, LLC


[1] https://www.irs.gov/pub/irs-news/fs-07-25.pdf

[2] https://www.jdsupra.com/legalnews/eeoc-has-begun-denying-employers-64416/

[3] https://www.jdsupra.com/legalnews/the-good-faith-defense-as-a-complete-64345/

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