Home > Case Histories, Field Audits > Typical Workers’ Compensation Misreporting by Small Firms

Typical Workers’ Compensation Misreporting by Small Firms

Most small firms being audited by Workers’ Compensation and Unemployment Insurance departments provide the following documents: check register, employee earnings reports, job orders, invoices to customers, and subcontractor information. A lot of this information does not meet the requirements of record keeping such as Washinton States’ per WAC 296-17-35201 administrative audit codes.

Here is a case in point: A parking lot stripping company for over 20 years has never been audited and never checked with their accountant for any updated requirements. They never knew they had too. French law: you are guilty until you prove your innocence. I have many CPAs that just pick up the phone and call me to handle the audit. From my 6 years with the Department, I know the language. Part of my working for the client is to make sure they understand what went wrong, and to make sure it never happens again. If they use my new software at www.wkrcomp.com, I can guarantee it!

The owner reported his hours to the Unemployement Insurance Department per his CPA’s direction. Something to do with IRS reporting of corporations. The Workers’ Compensation Department wanted to know why he was not reporting hours and dollars using optional corporate officer coverage. Other flags were time cards with names and hours, but no classifications. When they posted the hours into more than one classification, no details were documented. This resulted in the field auditor putting that person’s hours in the highest risk class per audit field manual guidelines. Another problem was bringing workers into the office during slow times to keep them employed. That is a NO-NO. clericdal series classifications cannot be split into different classifications during the work day. That worker can work in the office, but must be reported in his higher classification.

As the company evolved over 20 years, it did more than parking lot stripping with the use of other family members owning dump trucks and equipment. None of these classifications were reported to the Department. They got caught by doing a public works project which have their own compliance reporting rules. Again, no fault of their own, but they just did not know. They actually paid checks for no work as rent checks and paid premium payments in the office classification. A little goofy, but not really fraudulent. Look at our new Project Program in www.WKRComp.com to solve this problem.

Advise: call me before the audit. And, start using my software to ensure compliance with either agency.

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