Payroll Audit

At the end of each coverage year, a payroll audits is completed to ensure the correct amount of premium is collected. This is measured by the amount of payroll.

For smaller members, the audit is completed by telephone. Complete the following steps to prepare for your audit:

• Gather all individual payroll records by work code (department).
• Verify that total payroll is equal to the total of the quarterly 941 Federal Tax Deposit Reports.
• A certificate of workers’ compensation insurance must be on file for each independent contractor paid (form 1099 reportable) during the audited policy period. If a certificate is not on file, the member is responsible for workers’ compensation coverage and will be charged the appropriate premium.
• Count the total number of employees categorized as full-time, part-time and seasonal. Also determine the total number of statutory volunteers (firefighters, reserve police officers, EMTs, EMT trainees and certified first aid volunteers).
  • Calculate the amount paid to each employee, if any. The list must include all individuals employed during the audit period, whether or not they are still employed.
  • Reserve police officers’ payroll is determined by the time spent working, training and attending meetings. The total number of hours is multiplied by $10 to determine a payroll. Payroll should be allocated to code 7720V.
  • Iowa law mandates coverage for mayors, city council members and county boards of supervisors. Premiums are based on a minimum annual payroll of $300 per person. If paid more than $300, premiums are based on the actual amount including payment for meeting attendance. If they elect to donate their pay to the city, the minimum payroll is used. Payroll should be allocated to code 8810V.
  • Coverage for members of other boards and commissions is also mandated but premium is charged only on the amount they are paid, if any. The $300 minimum does not apply.
  • Premium for volunteer firefighters, EMTs and first responders is also based on a $300 minimum annual payroll per volunteer:
    • Volunteer Firefighter payroll is allocated to IMWCA class code 7711:
      • Wages less than $300, include at minimum of $300.
      • Wages greater than $300, include at actual wages.
    • Volunteer EMT payroll is allocated to 7705V:
      • Wages less than $300, include at minimum of $300.
      • Wages greater than $300, include at actual wages.
    • Combination Volunteer Firefighter/EMT payroll is allocated as follows:
      • If combined total payroll is greater than $300, use split and classify payroll in codes 7711 and 7705V.
      • If total payroll is less than $300, include at minimum of $300 in code 7711. There will be no exposure in code 7705V.
      • First responders are classified in 7711 and payroll determination is the same as firefighters.
  • If you have the medical-only coverage endorsement for non-statutory (casual) volunteers, include the total number of individuals who volunteered during the year.
  • Swimming pool employees are all classified under work code 9015 with the exception of park personnel who maintain the pool facility.
  • All airport personnel are included under the city’s coverage unless proof of other insurance is provided.
  • City attorneys generally have their own coverage. Verify coverage with a certificate of insurance from their attorney.
  • Payments for active military duty above and beyond accrued vacation pay are excluded from payroll for workers’ compensation.