What to Expect when a Former Employee Files a Claim

Employer Audits

Employer Compliance Audits are tools utilized to protect the integrity of the UI Trust Fund.

DWD Unemployment Insurance Auditors conduct random and targeted audits of employers to ensure:

• employers are following Indiana code and SUTA regulations
• accurately pay and report payments to individuals for services rendered
• pay their appropriate share to the UI Trust Fund
• DWD is consistent in our enforcement.

General Audit Process

1. Audit Notice is received - the employer has 10 business days to respond to the audit notice.
2. Employer contacts the auditor - you will have the audit process explained and be told why the business was selected for the audit.
3. A date and time will be set - at which time the audit records and information will be prepared for the auditor to examine and review.
4. A Confirmation Letter will be sent confirming the date and time and a 3-page Questionnaire will be sent, that needs to be completed and provided on the audit date.
5. On-Site Audit - payroll records will be examined and reviewed to verify the wages reported in both the Quarterly Reports and W2 are accurate, this takes approximately 4-6 hours.
6. Review of Disbursement Records - Tax returns, 1099’s, check register(s), General Ledgers and Financial Reports are reviewed.  If additional support documentation is needed the employer would receive ample time to provide the documentation and a final date is set.
7. The audit is concluded - The auditor explains all corrections or additional reclassified wages, what the results of the audit are and if there is an amount due or credit on the account.
8. The Audit Findings Letter and possibly the Notice and Demand are sent after the audit has been approved - around 10 days.

What will I need?

Employment Records

Per Indiana Code, employers are required to keep accurate payroll and employment records.

Records DWD expects to find when conducting an audit:

• All payments for service records
• Separate records for each worker showing dates of service, work location, payment dates and amounts paid
• Copies of W-2 forms and W-3 transmittal forms for each employee
• Copies of 1099 forms and 1096 forms issued
• All cash disbursement records, including check registers, check stubs, disbursement journals, and bank statements
• General ledger, chart of accounts, financial statements, and master vendor lists
• Canceled checks, petty cash receipts, daily cash reports, etc.
• Quarterly SUTA reports
• FUTA 940 forms
• FICA 941 forms
• Business Federal Income Tax Returns - 1040 Form Schedule C, 1120, 1120S, or 1065
• Any other records indicating payments for services performed
• Source documents showing the reason for any payments to individuals other than payroll. Valid documents include things like certificates of insurance, business websites, invoices, business cards, contracts, and receipts

Employer audit records and reports to DWD are confidential and are not published or open to the public. If the organization’s account is selected for an audit, the organization will be notified in writing and will be able to personally talk to the individual handling the audit. Please inform the assigned auditor of any special considerations.

For more Information visit: https://www.in.gov/dwd/files/Preparing_for_a_UI_Audit.pdf

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