Audit Season

Have you recently been selected for a State Fund audit on your workers compensation policy?  State Fund conducts mandatory premium audits on all new policies after the first year of coverage.  After that, they randomly select roughly 25% of policies each year for an audit.  

If you have questions on a premium audit, we're happy to assist, even if we don't process your payroll regularly.  We can review your records ahead of time so there's no surprises and then handle the audit from our office so that you don't have to deal with the stress. So don't panic when you get correspondence in the mail with that dirty little word and don't hesitate to ask us for help. 

Here's some information from Montana State Fund related to premium audits:

Why a Premium Audit?  

The purpose of an audit is to ensure you pay fair and accurate premium for your business operations during the policy period. When you purchased your policy, premium was estimated based upon the type of work and the anticipated payroll you expected to have. A premium audit is conducted at the end of the policy period to obtain the actual business operations and records to determine your final premium. The result - whether a return in premium, additional premium due, or no change to your premium - is your assurance that you paid the correct amount.

Types of Audit

There are two types of audits. An on-site audit, also known as a physical or field audit, involves a visit to your business location by our representative to review your operations and records. A phone audit involves a review of operations and records over the phone. In both cases, you will be notified in advance to arrange the audit appointment. During the process it is essential to have someone familiar with your overall operations present to answer the auditor’s questions and/or complete any necessary forms. You may have the audit performed with your accountant or other third party, however they must be familiar with your operations, staff duties and be able to accurately answer the auditor’s questions.

Are you hiring independent contractors?

If you enter into an agreement with others to perform duties for you, you are required to maintain and provide the auditor access to the following records for each of them:† 

• A certificate of workers’ compensation coverage 

or † 

• An Independent Contractor Exemption Certificate (ICEC) issued by the Montana Department of Labor and Industry.

If you do not have documentation confirming others you paid to perform duties lawfully secured their workers’ compensation obligations, any payments made to these workers may be treated as wages when calculating your policy premium.  

To obtain additional information regarding Independent Contractors and your responsibilities as the hiring agent, go to: erd.dli.mt.gov/work-comp-regulations/montana-contractor or contact the Montana Department of Labor and Industry (DLI) at 406-444-9029. The web site contains search options to assist you with confirming current workers’ compensation insurance coverage and/or ICEC status.