Things You'll Need:
- Payroll Records or Accounting System
- Your Work Comp Insurance Policy
-
Step 1
The best way to prepare for your audit is to make sure you are set up correctly from the beginning of your policy period. If you have switched carriers, don't assume that quoting the same exposures from your previous policy keeps you on track for the upcoming year. Once your final audit from your previous carrier comes in, compare this to your new policy to see how it stacks up. Meeting with the premium auditor at policy inception is another good way to ensure you have all your work comp codes correct.
-
Step 2
Run payroll records as close as possible to the policy period. Many premium auditors agree that the best system for producing these records is QuickBooks or similar software. The QuickBooks report that is most useful for your audit is the "Payroll Summary" report. Printing this report usually takes about a minute. If you do payroll by hand or another system, it may be easier to round to the nearest start of a month or quarter. Ask your premium auditor prior to compiling this data.
-
Step 3
To make sure you have a quick and accurate audit, you need to show the total gross payroll per person. This INCLUDES holiday pay, sick pay, vacation pay, and bonuses. There are few states with exceptions to this. Next, break out the overtime pay per person. One third of overtime is not included as billable wages. For example, if an employee makes $10 an hour and then makes $15 per hour on overtime, the premium pay of $5 per hour is subtracted from their wages.
-
Step 4
Compare your numbers to your closest dated Federal 941 forms or State Unemployment Quarterly reports. Your numbers should be close to this. Most premium auditors will ask for your quarterly reports for verification.
-
Step 5
If you are in doubt that you have the correct codes on your policy, check with your agent. Ask that they provide you with the Scopes Manual pages, if you are governed by a NCCI state (National Council on Compensation Insurance). You can find out if you are a NCCI state by going to https://www.ncci.com/nccimain/AboutNCCI/StateMap/Pages/default.aspx
Check your policy for duplicate codes. If you have a Work Comp code for Drivers, be sure drivers are not included elsewhere on your policy. Most of the time you can find this by looking at the description of the class code. If it ends in "& D" this means and drivers. Many codes such as gas dealers (8350) and lumber yard (8232) already include drivers and they can be included in this code instead of a driver only code (7380) which is usually more expensive.
Having all of your information ready and broken out will save you and the premium auditor time. This will allow you more time to ask the auditor questions and ensure an accurate audit by allowing proper time prior to the audit to gather your information.
