Posted by Maria T. Hurd, CPA
BLS understands the importance that payroll audits play in the annual audit of Taft-Hartley plans’ financial statements. A payroll audit is the colloquial term for an agreed-upon procedures engagement in which a multiemployer plan auditor tests whether employers signatory to the collective bargaining agreement are complying with their duty to report all covered hours worked to the benefit funds to ensure that contributions to the funds are complete and accurate. Contributions are a significant audit area of a benefit plan audit and performing payroll audits of participating employers on a cycle is a necessary and required audit procedure. Additionally, the Department of Labor can audit the quality of the benefit funds’ financial statement audits and reject the Form 5500 filings in cases when the auditors have not performed sufficient payroll audits. When Form 5500 filings are rejected, the funds have to incur the expense of re-audits, as well as the inconvenience. Retaining qualified auditors who understand the specific requirements of the industry, including payroll audits, is one of the trustees’ fiduciary responsibilities. Additionally, payroll audits often result in additional contributions to the benefit funds, to the point that the service often pays for itself. In over two decades of performing payroll audits, BLS has identified hundreds of thousands of dollars in omitted contributions to Taft-Hartley plan benefit funds. Indisputably, the participants, the funds, and the trustees all benefit from accurate and complete contributions to the funds and from a robust payroll audit program.
Photo by Dave Dugdale (License)
