For an end-of-year workers' compensation audit, which document must the employer provide to the insurer?

• A. Payroll records
• B. Payroll reports
• C. Tax returns
• D. Time sheets

Answer: (A)

In a year-end workers’ compensation audit, the insurer needs to verify the actual payroll used to calculate the premium. Detailed payroll records provide the exact amount paid to each employee, how they were classified (by job type), and any payroll adjustments. This information lets the auditor confirm total payroll and ensure the correct classification codes are used, which is what determines the premium.

Time sheets alone don’t show total payroll or the full mix of employee classifications across the entire workforce, so they can’t stand in for the payroll data used to compute the premium. Tax returns don’t provide the necessary breakdown by employee, wages, and classifications needed for the workers’ compensation calculation. Payroll reports might summarize data, but the insurer requires the underlying payroll records as the source documentation to base their audit on.