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Tech Trends in Payroll Compliance Testing

Tech Trends in Payroll Compliance Testing

The major technology trends affecting payroll compliance testing revolve around the use of electronic records and applying the paperless concept to remaining paper-based processes.  Fortunately, the trends that are delighting the payroll auditors are also benefitting plan sponsors and employers by enhancing services, streamlining processes, and reducing administrative and compliance costs.  But as with all good things, implementing the systems that reflect the latest trends is not without certain challenges.  Read about the following significant technology trends affecting contribution reporting and payroll and accounting exports. 

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Electronic Contribution Reporting

Payroll compliance auditors are increasingly seeing web-based contribution forms replace the traditional paper-based transmittal.  Online reporting forms provide employers with convenient access and immediate secure data transfer, and can facilitate accurate reporting by automating most hourly benefit calculations. 

Done properly, electronic payroll and accounting exports can save real money for plans that conduct a substantial number of payroll audits every year.

Online reporting has streamlined the audit process by providing a built-in audit trail and simplifying record retention.  Employers can easily store remittances electronically without additional scanning while reducing storage costs and eliminating the frustration of misfiled paper records. However, web-based reporting may prove costly to implement, depending on the plan administrator’s technology infrastructure, the complexity of the benefit reporting requirements and associated development costs.

Electronic Payroll and Accounting Exports

Advances in modern payroll, timekeeping, accounting and human resource systems have been a boon to payroll auditors.  The current versions of all major payroll and accounting systems allow users to export data in electronic format.  Employers may then distribute payroll data electronically to the compliance auditor for testing purposes, eliminating manual data entry and allowing for more cost-effective testing methods.  Using electronic contribution records from the plan administrator, the auditor may develop database applications to automate many testing procedures and provide the most accurate and timely results.  However, security is the major concern with transmitting employee or participant records.  Plan sponsors must ensure that all entities have implemented the appropriate security systems for data transmittal and that staff members involved in such transactions have been properly trained to safeguard the information.  If done properly, electronic payroll and accounting exports can save real money for plans that routinely conduct a substantial number of payroll audits every year.


Modern technology has been a big help to payroll compliance.  Moreover, the advancements that have helped to streamline the payroll compliance process have also enhanced plan administration and assisted employers in meeting compliance requirements.  We encourage plan sponsors to discuss these trends with plan professionals and participating employers to determine which opportunities are available.

Tim Hallenbeck, is a payroll compliance senior manager in Lindquist LLP’s San Ramon office with more than 10 years of experience performing and supervising payroll compliance audits.  He currently manages more than 300 employer audits annually for 11 families of trust funds in a variety of industries.  He has also helped to develop department training programs and re-design Lindquist LLP’s customized payroll compliance tracking systems.

Rachelle Hislop, is a payroll compliance senior manager in Lindquist LLP’s San Ramon office.  She has more than 20 years of experience in the employee benefit plan sector, including payroll compliance testing and plan administration.  She currently manages payroll compliance for programs for 18 trust funds.

Contact Tim or Rachelle with questions at (925) 277-9100 or thallenbeck@lindquistcpa.com / rhislop@lindquistcpa.com.

Our firm provides the information in this e-newsletter for general guidance only.  It does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind.  The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers.  Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.  Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer.  The information is provided "as is," with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.

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