Document name
Employer Audits
Document number
POL 03/2018

Effective date: December 1, 2018

Approved date: November 19, 2018

Application: Applies to all employers.

Policy subject: Employer payroll and premiums

Purpose:

To outline the WCB’s authority and process to audit an employer’s financial records and operations.

DEFINITION

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Section detail

Audit means a formal inspection and verification of an employer’s:

  1. Financial records to determine compliance with reporting assessable earnings, and
  2. Operations to determine if they are classified within the correct industry.

Assessable earnings are workers’ gross earnings before deductions for income tax, Employment Insurance, Canada Pension Plan, and other similar deductions up to the maximum assessable amount for the calendar year being reported.

Industry rate code means a collective liability grouping comprised of employers with a similar industrial undertaking or injury experience. All employers with the same industry rate code have the same industry premium rate.

BACKGROUND

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Section detail
  1. To safeguard the integrity of the compensation system and to ensure compliance with The Workers’ Compensation Act, 2013 (the “Act”), employer audits are conducted to:
    1. Verify that employers are correctly reporting assessable earnings and amounts for contractors hired.
    2. Ensure that employers are classified in the appropriate industry rate code to help maintain fairness amongst employers operating within similar industries, and within the WCB system as a whole.
    3. Educate employers, establish open communication and prevent irregular reporting.
  2. The Workers’ Compensation Board (WCB) has the same authority as the Court of Queen’s Bench to subpoena records (Section 21). The WCB may, at any reasonable time without a warrant, enter and inspect an employer’s establishment, including any books, records, papers or documents required to be kept in accordance with the Act (Section 127). A warrant may be obtained to enter, search and seize records (Section 128).
  3. When the WCB is carrying out its duties as authorized by the Act, no person shall (Section 129):
    1. Fail to comply with any reasonable request of the WCB,
    2. Knowingly make any false or misleading statements to the WCB, or
    3. Obstruct or interfere with the WCB.
  4. Upon inspection, if assessable earnings and contractors reported to the WCB are determined to be inaccurate, the employer’s assessment will be adjusted (Section 130).

POLICY

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Section detail
  1. All employers covered under the Act are subject to an audit.
  2. The WCB may audit an employer for any of the following reasons:
    1. The employer is engaged in a targeted industry being reviewed.
    2. The employer is part of a random sample.
    3. A refund is owed on the employer’s account.
    4. The employer is not compliant with their reporting responsibilities as per the Act.
    5. Any other reason as determined by WCB.
  3. An audit will confirm:
    1. The employer has reported the correct assessable earnings and/or the assessable labour portion for contract workers.
    2. The industry rate code in which the employer has been classified is appropriate and reflects their industrial undertaking (POL 14/2011, Employer Classification).

Conducting an Audit

  1. When requesting an audit, the WCB will notify an employer verbally or in writing and will provide at least five business days’ notice. The notice will outline what information the employer may be required to provide for the audit.
  2. Audits will generally include the three complete years immediately preceding the year when the audit is being conducted. However, at the WCB’s discretion, the audit may be extended beyond three years.
  3. To confirm assessable earnings and the amounts for contractors are correct, the WCB will review documentation and other financial records which may include, but is not limited to:
    1. Payroll records.
    2. T4 Statements of Remuneration Paid and summaries.
    3. Status of directors/proprietors.
    4. Amounts paid to contractors and a breakdown of labour, equipment and materials used.
    5. Trial balance and general ledgers.
    6. Cheque registry (synoptic).
    7. WCB file and working papers for Saskatchewan WCB and any other provinces, if registered elsewhere.
    8. For interprovincial trucking, a fuel tax report.
  4. The WCB completes audits on the employer’s premises or where the records are maintained. The WCB may require an employer to submit records directly to the WCB’s office.
  5. The WCB may request a tour of the employer’s premises to confirm that the employer has been assigned the correct industry rate code.
  6. The WCB may take possession of, examine, remove, take extracts from, or obtain reproductions of any information that is relevant to an audit.
  7. If an employer does not cooperate with an audit:
    1. A clearance hold may be placed on their account (PRO 22/2014, Employer Accounts – Clearances and Letters of Good Standings).
    2. If it is a refund audit, the credit balance may be cancelled.
    3. Their personal or optional coverage may be cancelled.
    4. They may be subject to a summary conviction (POL 26/2013, Fines and Penalties – General).
    5. The WCB may request records from the Canada Revenue Agency to complete the audit.

Audit Results and Adjustments

  1. The WCB will provide the employer with the results of the audit in writing with details of the information verified and if adjustments are required because of:
    1. Changes to assessable earnings or contractor amounts previously reported.
    2. A change to their industry rate code (POL 01/2020, Classification Change).
  2. The WCB will issue the employer a revised statement of account. The employer is responsible to pay the revised premiums resulting from the audit.
  3. Any assessment owing as a result of an adjustment must be paid within 30 days of the employer being issued a revised statement of account, PRO 12/2019, Default in Assessment Payment may apply.
  4. If an audit identifies that an employer overpaid premiums they will receive a credit for future premiums or may request a refund.
  5. Following an audit an employer may request that any decision to adjust their account be reviewed or reconsidered (POL 20/2013, Appeals – Employer Accounts).
  6. The WCB may share the results of an audit with another provincial or territorial Board/Commission, if the employer is required to have coverage and report earnings in another jurisdiction (i.e., province or territory). The disclosure of information to another Board/Commission will follow POL 05/2017, Privacy of Information.

Policy references

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Section heading

Legislative Authority

Section detail

Sections 20, 21, 127, 128, 132, 133

Section detail

The Income Tax Act

Sections 230(4)

Section heading

Document History

Section detail

(1) n/a; this is a new policy.

Section heading

Complements

Page/document title
ADM PRO 08/2014 Employer Accounts – Write-Offs

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