Your Annual Audit
The primary purpose of a premium audit is to calculate your final premium. When your coverage was issued, the premium was an estimate of an exposure basis multiplied by a rate. In the audit, LCI will examine your records to establish the actual exposure basis and make sure that the correct classification codes are used in determining your final premium. Because the original premium was an estimate, the audit may result in a change of premium and/or classifications for your business. You will be contacted about completing a premium audit after the coverage expires or is canceled.
Having the appropriate records available for the audit will allow the auditor to complete the process smoothly and accurately. Two types of documents are required to complete your audit: A primary source showing payments made to labor during your coverage period and a secondary source, such as a tax document that is used to verify the primary source. The primary source document should match as closely to your coverage period as possible. It is acceptable to deviate slightly from the coverage period. The secondary source documents may not line up with your coverage period. If your coverage period falls in the middle of the month, simply provide the most recent four quarterly (or annual) tax reports that most closely aligns with your coverage period.
For physical audits, you will be contacted by letter or phone to schedule a date for the audit appointment and you will be requested to provide certain records. For self-reporting audits, a form will be sent to you to fill out and return with the appropriate documentation. Some coverages that meet certain criteria may be eligible for a telephone audit. In all cases, accurate records that are complete and well organized make the audit process much easier. Your advance preparation will help the auditor quickly find what he or she needs and will require less of your time for questions and/or clarifications during the actual audit. If payroll records are being used for the audit, they should be organized to clearly show payroll by:
· Coverage period
· Names of workers
· Job duties of workers (List each type of job separately, i.e. clerical, sales, etc.)
· Separating overtime from regular pay
· Insured and uninsured subcontractors (if subcontractors are insured, please provide their certificates of insurance showing they had workers compensation insurance covering the dates they were paid during your coverage period)
For more information, contact Audit Manager Nancy Hebert at nancy@lciwc.com.
Below, you can gain easy access to all necessary forms.