Fundamental Payroll Audits and Record Retention Questions and Answers

Question 1

An employee was hired on March 1, 2023, and their employment was terminated on May 15, 2025.
According to USCIS regulations for Form I-9, what is the earliest date the employer can legally destroy this employee's Form I-9?

Accepted Answer

May 15, 2026

Answer

March 1, 2026

Answer

May 15, 2028

Answer

March 1, 2025

Question 2

According to the Internal Revenue Service (IRS), for how long must an employer keep employment tax records after the due date of the return or the date the tax is paid, whichever is later?

Accepted Answer

4 years

Answer

2 years

Answer

3 years

Answer

7 years

Question 3

What is the primary purpose of conducting a proactive internal payroll audit?

Accepted Answer

To ensure compliance with regulations and identify process inefficiencies.

Answer

To identify overpaid employees for disciplinary action.

Answer

To reduce the number of staff in the payroll department.

Answer

To prepare for an imminent and confirmed government investigation.

Question 4

Under the Fair Labor Standards Act (FLSA), which of the following payroll-related records must be preserved for at least two years, as opposed to the more common three-year requirement?

Accepted Answer

Time cards and wage rate tables.

Answer

Payroll registers summarizing wages paid each pay period.

Answer

The employee's name, address, and Social Security number.

Answer

Collective bargaining agreements.

Question 5

An employer must maintain records related to an employee's leave under the Family and Medical Leave Act (FMLA). What is the minimum retention period for these records?

Accepted Answer

3 years

Answer

1 year

Answer

5 years

Answer

For the duration of employment

Question 6

Which federal law dictates the general record retention requirement for payroll records, such as employee identifying information and total wages paid each pay period, to be at least three years?

Accepted Answer

Fair Labor Standards Act (FLSA)

Answer

Internal Revenue Code (IRC)

Answer

Immigration Reform and Control Act (IRCA)

Answer

Employee Retirement Income Security Act (ERISA)