The mere mention of a workers’ compensation audit is enough to strike fear in nearly any business owner. For anyone who is scheduled for an audit, there is no need to worry or be fearful. With a little bit of common sense and preparation, much money and aggravation can be spared.
It is important to devote a few hours to setting up preparations. This small step can prevent days and weeks of hassles in the future. Business owners should plan to give their full attention to the auditor throughout the process, which can take several hours from start to finish. For this reason, it is important to make sure the time and date are both convenient. If the audit has been rescheduled or was not set for an appropriate time, call to reschedule it.
Start collecting and organizing the records that show payroll reports and overtime. Make sure insurance certificates and classification divisions are also available. Write up a summary of each one to make explanations easier and to more effectively communicate with the auditor during the process. If information is organized well, this will help expedite the process. The auditor may feel more comfortable in trusting a business owner’s data if all calculations can be reconciled to payroll records.
Prior to the meeting with the auditor, it is also important to make any necessary adjustments to payroll. For example, a business owner might need to subtract bonus pay from overtime pay. Minimum and maximum payrolls will need to be applied to the calculations when applicable. This may take some research, and the amounts will vary from one state to the next. They also vary between types of careers, partners, executive officers and sole proprietors.
Business owners should make sure they understand all employee job classifications and can explain them clearly to the auditor. They should also ensure employees are properly classified for the work they perform. If the auditor has questions or concerns, this can slow the process down considerably. Auditors usually ask about duties and classifications for multiple employees, so being prepared is essential. For help classifying them, discuss the details and any concerns with an agent.
When working with subcontractors, keep in mind that payments made to them will go against workers’ compensation if they did not have certificates. Ask for copies of their certificates, and check them carefully to ensure they are updated and show coverage for the entire time span when the subcontractor was working. After the auditor arrives, all of these preparations will be well worth the time spent. Most business owners are also pleasantly surprised to find that auditors are not the mean individuals they picture them to be. Most auditors are pleasant and fair, and this is especially true when all of the details are in order.
After the audit is finished, politely ask the auditor for a copy of the worksheet. An agent can review it for accuracy. Every person has a legal right to request a corrected audit if any errors are suspected or confirmed. Business owners also have the right to recover any over-payments that were made under the previous three audits.
The Andrew Agency
If your business in Virginia needs Workers Comp insurance contact The Andrew Agency at 804.320.2886 or visit www.theandrewagency.com.