EMPLOYEE BENEFITS AUDIT WORK PROGRAM

Read those 3 steps below carefully to fill out the blank space in the table.

Step #1: Evidence Obtained

For each Project Work Step list each evidence the auditor obtained as applicable.

For example: HR/Benefits department organizational chart.

If no evidence was obtained for a step, note N/A. This will happen if the work step is an audit procedure and not a document request.

Step # 2: Level of Evidence Reliability

Refer to the reliability of documentary evidence in the workbook, Exhibit 10-2.

For each of the evidence obtained in Step #1, note the level of reliability (High, Medium, or Low). List each item and explain your reliability level choice (do not use generic statements; be specific to the case).

For example: High because the document comes from the HR system that holds information about all the employees.

Step #3: Audit Procedure

Audit procedures are specific tasks the internal auditor performs to gather the evidence required to achieve the prescribed audit objectives. Commonly performed manual audit procedures include:

1. Inquiry
2. Observation
3. Inspection
4. Vouching
5. Tracing
6. Reperformance
7. Analytical procedures
8. Confirmation

Refer to the illustrative applications of manual audit procedures in the workbook, Exhibit 10-3. For each audit procedure in the Project Work Step, as applicable, note the types of procedures the auditor performed (from the list above). Explain your procedure choice (do not use generic statements; be specific to the case).

For example, the auditor used inquiry to request the HR/Benefits organizational chart.

If no audit procedure was performed for a step, note N/A. This will happen if the work step is a document request and not an audit procedure.

AUDIT OBJECTIVES

• Inventory HR-administered employee benefits plans/programs.
• Review compliance with policies and procedures for employee benefits (commitments, disbursements, authorizations, payments, and provider agreements).
• Review the benefits disbursement process to understand payments to employees, providers, and others.
• Review how eligibility requirements are tracked and processed for company benefits plans/programs.
• Review the accrual, reporting, and authorization processes.

Project Work Step	Evidence Obtained	Level of Evidence Reliability	Audit Procedure
Information Request: Audit Preparation
Schedule a kick-off meeting with the benefits department contact person on the first day of the audit and obtain the following items at the start of the audit: HR/benefits organizational charts. Copies of existing HR and benefits policies and procedures (vacation, sick days, health insurance, stock plan, 401k, employee relocations, etc.) Copies of any HR and benefits desk procedures related to benefits administration and processing. A list of all active employees within System X (include location, title, pay rate and benefit plans to which they are enrolled). Access to employee payroll registers for the past fiscal year. Documentation of benefit plans and third-party provider agreements. Claim reporting (injury/disability logs). External reporting (EEOC, headcount, census and COBRA). All HR and benefits reports used by management to monitor activities (additions, change, deletions, metrics). A list of users with either direct or remote access to benefits applications. Copies of any recently issued audit reports for benefit plans. Engagement letters for audits of benefits plans. Audit logs for each of the following categories within the past three months, if applicable: Privileged users' account activities Data change activities HR application changes
Benefits Administration
Review compliance with policies and procedures for benefits (commitments, disbursement, authorizations, payments, and provider agreements): Review the existing policies and procedures for HR and benefits, including the HR Policy/Employee Handbook. Verify that the policies have been reviewed for compliance with the required legal language. Determine what process is in place to ensure that these policies and procedures are reviewed periodically for appropriateness and updated as necessary. Determine what recent changes have been made to policies and procedures and whether appropriate authorization for those changes was obtained. For example, review the board of directors' minutes to ascertain whether the recent changes were authorized. Verify that any changes were implemented through appropriate adjustments to related internal controls. Validate the process for assessing and communicating changes to the benefits plans/programs to employees, providers, and others. Verify that benefit information is updated and redistributed to employees when significant changes in rules or benefits occur.
Evaluate the skills and qualifications of the benefits department staff: Is there ongoing training available for benefits personnel? Is there a requirement for obtaining professional certifications? Are responsibilities for administering each benefits plan/program clearly defined and assigned within the organization? Determine what metrics/benchmarking are used to monitor the effectiveness of the administration of each benefits plan/program.
Determine the Legal Department's involvement in the management of benefits plans/programs: Is there a process to monitor compliance with regulations (FCPA, EEOP, Disabilities, etc.)? How does Legal communicate new requirements related to employee benefits? Are policies developed to cover legal requirements (FCPA, EEOP, Disability Act, etc.)?
Determine whether there are any excess funds within the benefits plans/programs and ascertain how these funds are monitored and managed in accordance with the plan.
Determine if there are issues related to the following within the benefits administration area: Segregation of duties Systems controls Others
Benefit Disbursements and Eligibility
Verify that a summary of benefit plans is provided to all eligible employees at the start of their employment.
Review benefits disbursements for each benefits plan/program (process to understand payments to employees, providers, and others). For each benefits plan/program: Obtain an understanding of the nature of disbursements related to existing benefits plans/programs. Review existing plans and ensure that disbursements being made are consistent with plan requirements/procedures. For example, review the records of part-time employees to verify that they do not receive health, dental, life, and long-term disability insurance benefits. For each benefit program, trace a sample of employees from the plan/program's participating employee list (per correspondence/bills received from the benefits provider) and match these employees to the deductions taken per company payroll records. Verify that the deductions are properly controlled and dispersed in a timely manner to proper agencies by reviewing monthly payable records for such activities. For each benefits plan/program, obtain an understanding of and review the process for reconciling benefit deductions to amounts disbursed to employees, provider, and others. For applicable benefits plan/programs, obtain an understanding of the procedures that employees must follow to claim benefits.
Review how eligibility requirements are tracked/processed for benefits plans/programs. For each benefits plan/program: Obtain an understanding of eligibility requirements for the benefits plan/program. Determine if changes to benefit eligibility and deductions are properly authorized and reviewed. Determine the basis of deductions for the benefits plan/program. Select a sample of deductions per payroll register and match them to the eligibility requirements and deductions under the plan/program. Verify that these employees were enrolled in the plan/program and that they authorized the amount of the deduction based on the employee plan/program election. Review the process for changing and communicating these changes in plan eligibility requirements and deduction rates to employees, providers, and others.
Benefit Accrual Process
Review the accrual process in place for benefits plans/programs. For each benefits plan/program: Obtain an understanding of the employer and employee liabilities associated with the plan/program. Verify whether procedures are in place to estimate and determine the adequacy of period-end accruals for the plan/program. Where accruals are subject to estimates, determine what corroborating information/evaluations are obtained to substantiate the period-end accrual amount. For example, where third-party information is relied on, how is this information validated?
Authorized Changes to Benefits
Review the authorization process for making changes to the benefits plans/programs. For each plan/program: Obtain an understanding of the authorization process for making changes to benefits plan/programs, including selecting providers. Ensure that the authorization process is consistent with existing corporate authorization policies.