Employer Auditing Procedures

Whereas, the Trustees of the International Union of Operating Engineers Local No. 132 Health and Welfare Fund and International Union of Operating Engineers Local No. 132 Pension Fund are responsible for collecting all contributions due from signatory employers, and

Whereas, permitting an employer to retain contribution amounts owed to the Fund would result in the Trustees not acting solely in the interest of, or for the exclusive purpose of providing benefits to the participants, and

Whereas, contribution compliance audits assist the Trustees in discharging their fiduciary obligations and provide the Fund’s independent qualified public accountant with the necessary evidence on which to render an unqualified opinion on the Fund’s financial statements,

Now therefore, the Trustees hereby adopt the following Contribution Compliance Audit Procedures:

  1. It is the intent of the Trustees to audit the contributing employers over a five (5) year period, with a minimum of 35 employers being subject to audit each year. The actual process of randomly selecting the employers to be audited will be at the discretion of the Fund Auditor. (Employers subject to audit within the previous two years will be excluded from the pool of employers selected for audit.)
  2. The auditor will contact each employer selected and make the necessary arrangements for conducting the audit and securing the required documents. To the extent possible, the audit is to be performed in a manner intended to least disrupt the employer’s operation. Should an employer refuse to cooperate with the auditor in the scheduling or performance of the audit, the Fund Attorney will be authorized to employ any method deemed appropriate to secure the necessary cooperation.
  3. The base audit period will consist of the two (2) fiscal years preceding the year in which the audit is performed. If, in the opinion of the auditor, substantial errors are discovered upon review of the base audit period records, the auditor is granted the authority to expand the audit period to encompass the three preceding fiscal years.
  4. The audit sample will be determined by the auditor using standards deemed to be statistically valid and in accordance with generally accepted accounting principles. However, if the average number of employees reported over the base audit period is less than twenty (20), the audit will include a review of all employees reported.
  5. Upon completion of the audit the auditor will provide the employer with a copy of the report prepared and provide the employer an opportunity to submit objections or responses to the conclusions contained in the report. If the employer fails to object to the report findings within fourteen (14) days from the date a copy of the report is delivered, it will be assumed there are no objections and the report will be considered final.
  6. Any interest or penalty payable due to underpayment of contributions due will be determined by the Administration Office and billed to the employer. In addition, the employer will be responsible for the actual cost of the compliance audit if the underpaid contribution amount due exceeds ten percent (10%) of the amount of the total contributions paid to the Fund over the audit period.
  7. Failure of the employer to remit the required contribution, interest, penalties and the audit fee, if applicable, within fourteen (14) days of the demand letter date will result in the Fund Attorney pursing through any means possible.

While the intent of this procedure is to audit all employers making contributions to the Fund on a random basis, nothing contained herein will prohibit the Trustees from authorizing more regular audits of employers who are delinquent in their payments, who consistently submit erroneous reports, who exhibit difficulties in making payments or who otherwise are, in the Trustees’ opinion, appropriate candidates for audit.