Audit:  Frequently Asked Questions...

 

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When is an audit performed?

An audit is performed at the conclusion of a policy term.  Normally, a policy is for a term of 1 year.  However, if your policy is shorter than the 1 year term, if it was cancelled by you or the carrier, there still would be an audit to determine the actual premium earned.  

Depending on your premium size and business type, the insurance company may elect to send you a mail audit form, asking that you mail in the records they need to complete the audit.  If you have been selected for a mail audit, normally it will be due within 30 days after your expiration.

Most policies have physical audits performed on them.  The auditor will generally contact you, either just before or within 30 days after your policy expires, to schedule an appointment.  The vast majority of audits are performed within 90 days of the policy expiration date.  

WCA is happy to help complete mail audit forms, schedule audits, prepare audit records, and even meet with an auditor for our customers.  

Whose compensation is included on an audit?

Anyone performing labor/services on behalf of the firm is included on an audit:

 

1.  Owners or Officers who are not either exempt by law or by a filing.

2.  Employees

3.  Casual Labor

4.  Uninsured Subcontractors

 

If a subcontractor does not have their own workers' compensation insurance, or an individual exemption, if they work alone, the entire amount of their pay is included.  If the subcontractor can provided itemized invoices for materials, then the cost of such can be deducted from the audit.

Can I appoint an outside individual/firm to be my audit representative?

Yes.  Many times, it is very inconvenient for the business owner to meet with an auditor.  Maybe, the insured is a contractor and is out in the field for the better part of the day.  Perhaps, the insured is a restaurant or a retail store and subject to customer demand.  It may simply be easier for someone other than the insured to act as the audit contact.  That could be your accountant or even your insurance agent.  You just need to make sure that they have been provided with all of the audit materials that will be necessary to complete the audit.  Work Comp Associates, Inc. acts as representatives for insurance audits all the time.  Part of the services we provide is to assist you in the preparation of the audit materials, meet with the auditor and then verify that the resulting final audit is in agreement with the records that have been provided.

What if I don't agree with the results of the audit?

If you believe your audit is incorrect, you can dispute an audit.  The first step is to write to your carrier, within 30 days of receipt of the Premium Audit Notice,  and lodge a formal audit dispute.  You need to include the policy number, policy period and the reason(s) for your dispute.  The next step is to request a copy of the audit worksheets so that you can ascertain where the specific differences are.   Work Comp Associates, Inc. will be glad to assist you in this process.

 

If there is still a dispute after carrier review of the additional information and the dispute is based on NCCI's manual rules, your appeal can be made to the NCCI's Dispute Resolution Process. 

What happens if I don't cooperate with the audit?

Employers shall make available all records necessary for the payroll verification audit and permit the auditor to make a physical inspection of the employer’s operation. If the employer fails upon request of the auditor to provide access to the documents specified in this section and the carrier cannot complete the audit as a result, the employer shall pay $500 to the carrier to defray the costs of the audits. (440.381(5))

If an employer fails to provide reasonable access to payroll records for a payroll verification audit, the employer shall pay a premium to the carrier or self-insurer not to exceed three times the most recent estimated annual premium.(440.381(8))

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