How to Prepare for an Audit

Aim for Accuracy and Stay in Touch
With adequate preparation, you can help reduce the amount of time and material required during an audit. Implementing a few basic organizational and communication practices during the year can make the difference. You help expedite the auditing process when you:

• Report payroll accurately throughout the policy year, using correct amounts and classifications.
• Inform us during the policy year if operations change or if new employees are hired who perform different tasks.
• Maintain clear, accessible records, including payroll earned under endorsements for a waiver of subrogation or an Owner Controlled Insurance Policy (OCIP).

Gather Written Records
Gather in advance the types of records we normally request during an audit. Important records include:

• Certificates of insurance for all independent contractors.
• 1099s issued.
• Names and job titles of employees.
• State Quarterly Wage and Withholding Reports (DE 6 forms).
• Payroll journals.
• State Fund payroll reports for the coverage period being audited.

While the information needed for each audit may differ, your auditor may ask you to make the following records available as well:

• Payroll registers, time books, time cards, check registers, check stubs, and checkbooks.
• Cash disbursement journals, cash books, and petty cash books.
• General or subsidiary ledgers, job cost records, bonus ledgers, and commission ledgers.
• Profit-sharing reports, prevailing-wage determination sheets, and federal and state tax forms.