Delinquency Collection Policy and Audit Criteria Internal Audit Procedures
During the first week of each month, the Funds forward contribution reports to each participating employer. The reports are preprinted; that is, they will list the names of the employees from the employer’s last report that was entered into the Funds’ computer. For new employers, blank reports will be mailed to be used for the initial remittance.For employers who have more than one contribution account, separate accounts are maintained for the following reasons:
- different Local Union representation
- different work locations
- different contribution rates
When an employer has more than one contribution account or their contribution account is more than one sheet long, the Funds will mail all of those reports together in the same envelope. If you are receiving your contribution sheets in different envelopes, please contact the Audit Manager.
It is the employer’s obligation to complete the report listing the amount of contribution units which are due in accordance with the terms of the collective bargaining or participation agreement. The employer is to include contributions only for employees covered by their agreement. The units are totaled, with the sum(s) being multiplied by the applicable contribution rate(s) for each Fund. Separate checks are then forwarded with the original report to the Fund offices before the due date.
If an employee needs to be added, the employer adds that individual on the bottom of the list, with their Social Security number and the contribution units. If an employee is to be deleted, the employer should write “Delete” next to that person’s name.
The contribution units are to be calculated on a strict calendar basis, that is, taking only in consideration the days contained in that particular calendar month. Contributions are not to be calculated on a week ending basis.
If you have determined that you have erred and have overreported contributions to the Funds, you may not unilaterally take a credit in subsequent remittances. You may not take a credit unless authorized to do so by the Fund. Refunds or credits for overpayments are given only under the terms of the Trustees Resolution regarding the return of overreported contributions. A letter should be forwarded to the attention of the Audit Manager setting forth the basis of the overpayment and requesting a refund.
Any questions regarding the completion of the contribution report should be addressed to the Audit Manager. We encourage you to e-mail any questions you may have.
The determination of which contributing employers will be audited by the Funds is not an arbitrary process. There are various criteria employed to determine the appropriateness of an audit of an employer’s books and records. The methods generally used by the Funds to determine which employers will be audited are as follows:Is the employer still a contributing employer?
If an employer has withdrawn from the Pension Fund and had been a contributing Employer for at least 12 successive months prior to its withdrawal, that Employer is audited. The withdrawal can occur in several ways:
- the employer’s operations or business may have been terminated;
- the employer may have been working on an area project which may last only for a specific period of time and contributions are only due while working under a Local’s jurisdiction for that project;
- the employer’s collective bargaining agreement with one of the Local Unions may have expired and was not renewed; or
- the contract may have been changed, naming a new benefits provider.
Audits are attempted for all employers who have filed for protection under the bankruptcy laws. By auditing the bankrupt employer, the Funds can insure that they have an accurate claim for the bankruptcy proceeding and that they have on record the correct hours for the employees’ work history.Is the employer delinquent and has the matter been referred to Counsel for further collection action?
Audits are performed on most companies against whom the Funds have initiated legal proceedings in a collection action. As with the bankrupt employer, an audit is conducted to insure that the correct amount is used in resolving the delinquency, as well as to insure that the correct hours are recorded for the employees’ work history (especially in cases where the employer has not submitted any reports). If the Funds do not perform an audit in a case where a lawsuit has been started or where a delinquency has been settled, then Fund Counsel will preserve the Funds’ right to perform an audit of this specific time period should the Funds decide to audit at a later date.Is there a problem with the contributions that the employer has been remitting?
If someone determines that there is a problem with the hours an employer is contributing, then that person may request that an audit be performed. Normally, a request of this type would come from the Audit Manager, the Administrator, a Union official or, in some cases, the employer itself. In any case, the individual making the request is aware that a problem exists, with an audit serving as the most efficient manner to resolve that problem.Is the employer on the Funds’ sample run?
Each year, the Fund’s Audit Manager, working with the Fund’s Independent Auditor, develops a listing of the audits to be performed in the following year. This list is a random selection from the current roster of contributing employers using the parameters set by the Audit Manager. The Independent Auditor reviews the results of such audits (i) as a condition of providing the Funds with an unqualified audit opinion letter as to the Funds’ financial statements, and (ii) to ensure that the Funds comply with the payroll auditing procedures established as part of the Funds’ systematic procedure to identify and collect contractually-required, delinquent employer contributions.
The Audit Department attempts to identify delinquencies as early as possible. Its internal controls are efficient in detecting when and where a delinquency exists. On or about the 5th of the month, “data mailers” are received from the Data Processing Department. These mailers are computer-generated form notices to the contributing employer showing which monthly remittance reports have not been entered into the Funds’ computer system. These forms are checked by the Audit Department for errors or for reports received, but not yet entered. After this review, these notices are mailed to the delinquent employers.Follow-Up Letter
On or about the 20th of the month, the Audit Manager will send the employer a final letter notifying it of the delinquency and demanding that all current and delinquent contributions be paid within five days. The notice also describes the ramifications under ERISA if payment is not made. If the employer responds but cannot pay in full, the Audit Manager will attempt to resolve the matter internally.Referral to Legal Counsel
If internal measures fail to secure a satisfactory resolution to the delinquency, or if there is no response to the earlier notices, the matter is referred to Fund Counsel for further collection action. Counsel will attempt to secure a judgment for the amount of the delinquency as quickly as possible. In securing delinquent moneys, Fund Counsel usually recovers interest, as well as the attorney fees incurred in connection with the delinquency.