Payroll Audits

[luissaha]

I have a fund client whose payroll auditor is also the auditor for the sponsoring union. This seems like a conflict of interest to me. Is anyone aware of any ethical/professional guidelines for auditors so I can look into this? Has anyone dealt with this kind of matter previously?

[Bill Ecklund]

I have a fund client whose payroll auditor is also the auditor for the sponsoring union. This seems like a conflict of interest to me. Is anyone aware of any ethical/professional guidelines for auditors so I can look into this? Has anyone dealt with this kind of matter previously?

Assuming this is a reliable auditing firm, this is not an issue. If there is concern, the auditor could sign a confidentiality agreement with the employer(s) whose payroll is being audited.

[JohnCheek]

A payroll audit is not the same as a financial statment audit, and there is no requirement that the payroll auditor be "independent".

While many funds hire a payroll auditor that is different from their financial auditor, I think more use the same firm for financial and payroll audits. And most fund auditors tend to also be the union auditors.

When I do a payroll audit, I am not only checking that the fund contributions were calculated and reported in accordance with the collective bargaining agreement, but I am expected to check wages, OT provisions, and other CBA provisions that relate to union matters.

I am not sure how a confidentiality agreement could be enforced.

[Erik Read]

I would only be concerned if the Trust's Payroll (AUP) auditor is also the Unions CPA and preparing the payroll - then they are auditing their own work.