If you’ve never endured a workers’ compensation audit, then you're among the lucky. Preparations can help avoid the arduous process. One key is to think about how you’d prepare for an audit before the possibility ever arises.
Good documentation and recordkeeping will allow you to respond to an audit request quickly and efficiently.
Dan Bukaty, president of Bukaty’s Property & Casualty division, has walked dozens of customers through the audit process.
“Although we aren’t the auditing entity, we can help our clients prepare,” Bukaty said. “If the process becomes contentious, we’ll step in on our client’s behalf to make sure their interests are represented.”
Typical audit requirements:
• Payroll records including federal 941 tax reports, state unemployment reports and individual earnings records.
• Separate totals for vacation and overtime should be kept when applicable.
• Employee records including the number of employees and hours, days or weeks worked annually.
• Sale journals including all goods or products sold, rented, and/or distributed as well as services, repairs and installations. Sales or excise taxes collected separately and submitted to the government need to be identified in order to be excluded from the audit.
• Check register and cash disbursements showing subcontractors, material costs and payments for casual labor.
• Income statements including subcontracted costs used to determine the costs.
• Certificates of insurance showing the required limits of liability and indemnification language from subcontractors used during the policy period.
For questions about Workers' Compensation or other business risk management topics, contact Dan Bukaty, 913-951-2400.