Don’t go the audit route alone
The typical audit process inherently works to your disadvantage
Many businesses accept on “good faith” that the Workers’ Comp audit is done right. Because your actual insurance cost is only determined after your policy expires, it is essential the audit is correct. Yet, the audit process is complex and prone to many errors and omissions.
Certified WorkComp Advisors (CWCA) understand the rules and are trained to find the problems and keep you from being overcharged. You wouldn’t allow an IRS Agent to conduct an audit without an expert at your side. Why allow an insurance company’s auditor to conduct an audit without an expert in your corner?
Here are some of the reasons overcharges occur in the typical audit:
•Misclassification. There are over 600 types of classifications in the Workers’ Compensation manual. Auditors often start with all payrolls in the highest rated code or they may change classifications to a higher rate, even though this often may not be done retroactively.
• Excluded remuneration. Auditors fail to check for all types of excluded remuneration. While rules and definitions vary, overtime, tips and gratuities, dismissal or severance payments except for time worked or accrued vacation, active military duty, payments into a qualified third-party trust for the Davis-Bacon Act or similar prevailing wage law, valid business expense reimbursements, use of company-provided automobiles and employer contributions to employee benefit plans are just some of the types of remuneration that often inflate payrolls.
• Executive payroll. Auditor may fail to identify all of the executive names and therefore, the payroll is not capped.
• Subcontractors. Certificates of insurance are not obtained from subcontractors. Auditor searches the general ledger, adds the uninsured subs, uses full contract price, rather than payroll costs.
CWCAs know the rules and help you control the audit by properly building an audit package prior to the audit. This saves both you and the auditor time. Working with the auditor, our approach is not adversarial, but professional and the results are an accurate, overcharge-proof audit.