How to Be Audit Secure Mini-Course


Part One - Reasonable Basis

  • Establish Reasonable Basis

Establish Reasonable Basis

Lisa: Hi, welcome back to Be Audit Secure in this part of our series, we're going to be discussing reasonable basis. What is reasonable basis? Well, for me, reasonable basis is non-negotiable reasonable basis basically is a legal term. And what it means is that you can point somewhere to something, to defend policies and procedures that you carry out in your organization on a regular basis. There are three big questions that every auditor is going to ask you. And the number one question is what made you think you could do it that way? You have to establish reasonable basis. You have to have a reasonable resource that you went to get the information that led you to make the decision, to carry out certain policies, procedures in your organization in that certain way. So, think about it. If the auditor came to you and said, what made you think you could do it that way? Would you be able to answer the question? In our next section, we're going to talk about the rule of threes. And I'm going to give you some ideas about where you can go for reasonable basis, but until next time I'm Lisa Smith Be Audit Secure.

Part Two - Rule of 3's

  • Rule of 3's

Rule of 3's

Lisa: Hi, welcome back to Be Audit Secure in this series. We're talking about how you can effectively survive an audit with my seven-point checklist. So, we've already covered reasonable basis. Let's cover the rule of threes. What is the rule of threes Well, for me, I am not going to teach or publish or train on any particular subject or topic, unless I know that the information, I am giving out is correct. So, how do you know? Like I said before, you don't know what you don't know until, you know, you know, no, we don't know. And so that's the confusing part. When you check things at least three times from three credible sources and you get the same answer, then you can be fairly secure that what you're implementing in your organization is true and correct and will withstand an audit. And at the very least, if you do make a mistake and the auditor inspector investigator or litigator comes in and says, you're doing it wrong, you have a lot of good faith efforts to show that you did everything.

Lisa: You could define the correct information and obey the law. The rule of threes check them three times before you believe them. Now, where are we going to go for the rule of threes? Well, of course, we're going to go to the government and we're going to say government, how do you do it? But don't stop there because you know what laws change court cases get decided all over the United States every day. And that court case that was just decided this morning might in fact, impact greatly the way you do business this afternoon. So, make sure that you don't stop at the government, have a good, solid professional resource to go to. There are a lot of them out there, make sure that you are being advised by folks that know what they're talking about. Have a good solid desk reference to maybe a big thick, legal book that's written in plain language.

Lisa: That would be helpful if you had three sources that you could credibly point to and say, this is where I got my information. Then you would be at a pretty good safe place. Even if you're doing it wrong, you'll have a lot of good faith points built up to show that you were trying everything you knew to obey the law at all times. The last thing that I'll say here on the rule of threes is this. When you go to make sure you have three credible sources, make sure you can document those sources. So, for instance, if your attorney tells you do it way, get it in writing. If your CPA tells you do it that way, get it in writing because sometimes conversations are forgotten. And in the event that you need to prove you were advised by a credible source, you will also need to prove that that source advised you. So, get it in writing. Remember this documentation beats all conversation until next time I'm Lisa Smith, Be Audit Secure.

Part Three - Policies and Procedures

  • Policies and Procedures

  • Creating Policies and Procedures Part 1

  • Creating Policies and Procedures Part 2

  • Creating Policies and Procedures Part 3

  • Creating Policies and Procedures Part 4

  • Creating Policies and Procedures Part 5

Policies and Procedures

Lisa: Welcome back to Be Audit Secure. I'm Lisa Smith in this section of our series, we're talking about the importance of having employee policies and procedures in place. Now, a lot of folks listening to this will say, Oh, she's talking about those darn policy and procedure manuals again. Well, it's true. I am because there have been many, many court cases, including the Supreme court that have rendered judgments at the very end saying if only the employer had had policies and procedures in place. Oh, my goodness. That means we have to have them. If we want to survive an audit and inspection and investigation or a lawsuit. That's right. So, think about it. Do you have a good solid employee handbook in place? Does that handbook talk about all of the things related to your employees and their benefits and their requirements? or does it only address things like how much vacation time they get, make sure that your employees understand what your corrective action process is going to be in the event of make sure that you have language complying with federal and state guidelines.

Lisa: For instance, do you have a good voting policy? Do you have a good jury duty or bereavement leave policy? Do you know what the policy is in your state on domestic violence leave? or perhaps leave That's afforded to victims of any sort of a violent crime. Many States have enacted those policies, procedures, laws, regulations, and it's up to you as an employer to know the law and to set it straight for your organization and then enforce it. So, we have a lot of work ahead of us. If we want to make sure we survive an audit, whether it's payroll or any other sort of human resources audit, maybe it's a lawsuit and investigation. Maybe it's OSHA coming to inspect you. Then we are going to have to have good solid policies and procedures and action plans in place so that when we're questioned on why you do the things you do? and how do we know what we're supposed to do in your organization?

Lisa: You'll be able to show your policy and procedure manual. And there will never be a question as to what your intention was, because remember you can't prove your intention. You can only prove what you can prove. And when the chips are down, your policy manual may very well be your star witness. So, ask yourself is my star witness prepared to go to bat for me? or is my star witness prepared to bury me? Good food for thought, join us in the next segment where we'll be talking about standard operating procedures until then I'm Lisa Smith Be Audit Secure.

Part Four - Standard Operating Procedures

  • Standard Operating Procedures - Intro

  • Standard Operating Procedures - Part 1

  • Standard Operating Procedures - Part 2

  • Standard Operating Procedures - Part 3

  • Standard Operating Procedures - Part 4

  • Standard Operating Procedures - Part 5

Standard Operating Procedures -Intro

Lisa: Hi, welcome back to Be Audit Secure in this series. We're talking about the things you need to do as a small business employer to stay clean and clear if you're ever audited inspected, investigated, or litigated against. Here we go. The next part of our series talks about standard operating procedures. That's right. We need to not only have an employee handbook with good policies and procedures in them, but we need to have standard operating procedures for every task that our employees do. It, especially the tasks that could be related to audits and closely litigated or regulated duties. So, think about it. If you had all of your employees, sit down and take apart their job description and break down each task, they perform and write a step-by-step process for completing that task. How long would it take you? It would be a lot quicker than sitting down to try to create it yourself.

Lisa: So, my point is enlist. The help of the workers who perform the functions. For instance, in your payroll department, you're going to onboard a new employee using the W-4. So have your W-4 person write down a step-by-step process of how you onboard with a W-4. And don't forget, not only put the things that you do put the things that you refuse to do as well. For instance, in the I-9 process put down for instance, that we require all of our employees to show the documents in person, and we review them personally, do you keep copies? I don't know, write it down. And then for instance, on the, what you don't do say for instance, we never instruct the employee on which documents to present the documents presented are from lists A, B, and C, and at the employee's discretion. So, you can word it however you want, but in the long run, you're not only putting the things that you do to comply with the law.

Lisa: You're putting the things that you will not do in order to comply with the law as well. So, think about that, talk it over with all the workers in your organization and get started on SOPs, because I can guarantee you whenever that subpoena comes your way, it will include a request or demand for standard operating procedures. Have those ready so that you can turn them over and feel secure that your audit inspection investigation or a lawsuit is going to be handled with a large level of preparation on your part until next time I'm Lisa Smith Be Audit Secure.

Part Four - Communication

  • Communication

  • Communication and the 4 Personality Styles

  • Communication and the - Direct Red

  • Communication and the - Dynamic Yellow

  • Communication and the Detail Blue

  • Communication and the - Caring Green

Quality Communication

Lisa:  Hi, I'm Lisa Smith. Welcome back to Be Audit Secure in this series. We're discussing the things employers and small businesses need to do in order to get ready to survive that audit inspection investigation or litigation. So here we go. The next point on the list is good, solid communication. What? That doesn't sound very technical. I thought we were talking about technical audit stuff. Well, we are, and previously we've discussed good policies and procedures and standard operating procedures that you need for your organization. Those are definitely effective tools for communication, but how about the rest of the communication in your organization? How effective is it really? Are your listeners good listeners? Do they really hear the needs of the workers? or Do We kind of just sort of fly by thinking we know what everybody's going to say next? and preparing when really, we're. So ill-prepared to find out what the conversation was really all about.

Lisa:  It can be quite difficult tackling communication because we all have a different communication style. However, I will tell you that there is one foundational piece of communication that not everyone employees, but if you do, you will find that your organization is much more successful. And that foundational piece of communication is something that improvisers in the professional comedy and theater world had used for years. And it's called the yes and. So, what is the yes and? Well, the yes and is listening to what someone says, their ideas, their thoughts, their feelings intently, and seriously, and saying in your mind, if not even verbally, yes. And what you say next will either move the conversation forward or put a big old roadblock behind it. But when you use the thought and, in your mind, it tends to make us think in a more positive direction. Like we're adding to the conversation, we're moving the conversation along now.

Lisa:  Yes and does not mean for a minute that you just agreed with what the person says, but what it does give you is the opportunity to let that person know that you heard them, they feel validated. You feel good because you're a validating good communicator and your conversation moves ahead. Maybe you're trying to decide on a new policy in procedure in your organization. Someone throws out an idea to have, paid jury duty, but that would be great, except that it's really not, but budget-conscious for your organization. So, you say yes. And I like that idea because it would be really great for non-exempt employees who have to be out for several days and go without pay due to jury duty, thinking it through. However, I'm going to add to that comment and say that after looking over the budgeting, I'm not sure we can do jury duty with pay for the entire time. And employee is out. Maybe we could do it for the first day that they're out and then leave it optional after that, if they want to use paid time off from their bank, see that's a yes and. The opposite of yes and as what more commonly will happen in many organizations. And that is, yeah, that sounds like a good idea, but it will never work here. We will never get that approved through budget.

Lisa:  So, that's it? We're not even going to try? See that's the, yeah, but. It puts a roadblock in front of us. We cannot move forward. So, think about it. Yes and may turn out to be a no in the end, but it's not presuming that it's a no straight away without actually hearing the person out. Maybe hearing the rest of the story, something else that we have they had in mind that we're not aware of yet. Yes, and if we become a lot of, yes, Anders in an organization, we will be much happier and much more productive. Yeah. But, or yeah. But, or no stops us in our tracks. And when it comes to employment, law compliance regulation by the government in various areas that we must comply with, it's always good to stop, take a beat, think it through, and fully agree that we have vetted this process completely.

Lisa:  That way, when the auditor inspector investigator or litigator comes in and asks, why do you do the things the way you do them? and how do you do them? Everyone in the organization understands because they have felt heard. They have been communicated with well on all fronts and our folks are ready to say yes. And I will be happy to tell you how that works here instead of, yeah, I'd love to tell you, but I'm not really sure myself, because nobody here is a good communicator. So, communication, it is a key to surviving through an audit inspection investigation or litigation. Think about that and say, yes, I will try to implement that in my organization yes and. Until next time I'm Lisa Smith Be Audit Secure.

Part Five - Internal Audits

  • Internal Audits

Internal Audits

Lisa: Hi, welcome back to Be Audit Secure in this last piece of our training series on audit, securing your business, we are going to be discussing the key to all of this and that is internally auditing and self-correcting. So, let's run through the checklist very quickly. You have reasonable basis. You've checked everything and got the great answer. Same answer three times from three credible sources, you have great policies and procedures. Everyone has a step-by-step SOP or standard operating procedure. You have great communication in your organization. You're a bunch of, yes, anders and you're good at training. You believe training is important, so we should be functioning quite well. Well, but how do we know? We have to internally audit. So, some of the audits that you guys perform, you will be internally auditing things like one plus one equals two, right Those are the math audits.

Lisa: Those are the ones that are easy to survive, but we're not talking about math. We're talking about making sure your employees, managers, supervisors, directors, are all interpreting the law in the right way. And in the same way we need for them to all speak with one voice. And how do we know if that's actually happening or not? Well, we internally audit. We go back through on a regular basis, maybe annually, maybe more often than that. And we check how we're doing. How do all of our W-4s look? Are they all clean and pristine? Have we sent out all of the 1099s that we were supposed to this year? Remember when send out, send it out, come up with your own cheesy little sayings to make sure that your employees remember the important things in the organization, go through and look at all of your I-9s.

Lisa: You know, you can be penalized $110 per technical error on an I-9. So, we need to go through I-9s and audit them to make sure they're all correct and clean and proper. And if they're not, we need to fix them. There are so many maybe things to audit in our organization. Our policy and procedure manual should be audited. Our standard operating procedures should be audited to make sure we didn't miss a change that was made at some point during the year. Once we do all of these internal audits and make all of the corrections, then we're going to document what we did in process of auditing and how we fixed it. Because if you ever have an internal audit that says, we're awesome, we rock our audits. We do everything right in our organizations. You know what that is. That's basically daring and inspiring factor or an investigator or a litigator to fund where you did it wrong.

Lisa: But if they can walk in and see where you've done, your audit, you found the problems and you fixed them. Now, investigator auditor, inspector litigator, and these folks don't feel like they have to work as hard because you've shown good faith efforts. You've shown an honest, forthright, determined process for maintaining obedience to the law in your organization, because part of your culture is doing it wrong. It's not an option here. And if we find out we have done it wrong, we're going to fix it and do it right from now on. You can only really prove that through documentation based on internal audits. So, think about that. No matter how small or large your business might be internally, auditing is going to be your key. I hope you've enjoyed this series. I hope that you have your audit secure checklist from in hand, and you are ready to survive that fateful day until I see you next time. I'm Lisa Smith Be Audit Secure.

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