Tax Information For Employers

Employer Field Audits

17. What is an Employer Field Audit?

1. A field audit is a systematic examination and verification of an employer’s books and records. The audit, conducted using generally accepted auditing standards and procedures, covers a specific period of time for which the employer is liable under the SCES Law. An audit, in addition to promoting employer’s understanding of their rights and responsibilities under State Law, is undertaken:

• To determine the taxable wages paid by the employer, and the amount of contributions, interest, and penalties on these wages required under the SCES Law.

• To reconcile wages reported to the State with amounts discovered during the audit.

• To determine the financial ability of the employer to meet UI tax obligations.

17. What are the primary objectives of the Field Audit Program?

1. The major objectives of the Field Audit Program are:

• To ensure compliance with tax provisions of State UI Law by establishing the correct taxes due, obtaining proper contribution and wage reports in accordance with State law, assuring that liable employers are operating bona fide businesses and analyzing the financial status of delinquent employers to aid in the collection process.

• To foster employer understanding of what the UI Law requires by explaining employer responsibilities and legal requirements under the tax and wage reporting provisions and explaining employer responsibilities and legal requirements under the benefit provisions.

• To maintain a good Agency-Employer relationship by providing information about the complete Employment Security Program by explaining the availability of local Job Service.

• Offices for the recruitment of qualified workers and explaining the availability of UI personnel to assist in any claims activity.

17. What records are reviewed by the Field Auditor?

1. The following records are reviewed by the Field Auditor:

• Source Records for Payroll Information in order to establish acknowledged payroll, i.e., time clock cards or time sheets, timekeeper’s books, employee’s pay period or earnings statement, individual earnings records, payroll summaries, and EDP records.

• Books of Original Entry with Payroll Information, i.e., payroll ledger, cash disbursements journal, voucher register, check register, general journal, special journals and petty cash.

• General Books and Accounts with Payroll Information, i.e., the general ledger, records that supplement the general ledger accounts, profit and loss statement (income statement), and balance sheet.

• State and Federal Tax Reports on Payroll, i.e., Employers Quarterly UI Contribution and Wage Report (UCE-101/120); Federal Forms:  940, Annual Report of FUTA,  941, Social Security Report; 942, Social Security Report on Domestic; 943, Social Security Report on Agricultural; Employees' Tax Withholding Statements; Workers Compensation premiums; Federal Income Tax Reports; Federal Forms 1096 and 1099; and Special Corporate Records—Minutes Book, Stock Register, and Corporate Charter.