Fundamental Payroll Audits and Record Retention Flashcards

Which federal agency is primarily responsible for enforcing FLSA recordkeeping requirements?

Answer: Department of Labor Wage and Hour Division

The Department of Labor's Wage and Hour Division enforces FLSA provisions, including recordkeeping requirements.

A payroll audit reveals that an employee's Form W-4 on file is from 2015 and has not been updated. What action should the employer take?

Answer: Request an updated Form W-4 but continue withholding per the existing form until a new one is submitted

Employers may continue using an existing W-4 until the employee submits a new one; the old form remains valid.

Under ERISA, how long must plan administrators generally retain retirement plan records?

Answer: 6 years

ERISA requires that plan records sufficient to determine benefits be retained for at least 6 years after the filing date of documents based on the records.

During an internal payroll audit, an auditor tests whether terminated employees were removed from payroll promptly. This control primarily prevents which risk?

Answer: Overpayment to former employees or ghost employee fraud

Ensuring timely removal of terminated employees prevents unauthorized payments to individuals no longer employed.

Which payroll record element is specifically required by the FLSA for non-exempt employees but NOT generally required for exempt employees?

Answer: Hours worked each workday and workweek

FLSA requires precise daily and weekly hours worked to be recorded for non-exempt employees to support overtime calculations.

A payroll department implements dual authorization for direct deposit changes. This control is designed to mitigate which audit risk?

Answer: Fraudulent redirection of employee wages

Requiring two approvals for bank account changes prevents a single employee from fraudulently redirecting direct deposits.

Under the ADA and Title VII, how long must employers with 15 or more employees retain personnel and employment records?

Answer: 1 year

EEOC regulations require covered employers to retain personnel records for at least 1 year from the date of making the record or the personnel action.