We audit employers' records to ensure that wages and hours are accurately reported as required by Washington State's unemployment-insurance laws and rules. Being selected for audit does not mean you violated any laws or rules.
How Far Back We Audit
We typically request three years worth of records. If an auditor finds questionable business practices, the audit may be expanded. RCW 50.24.190.
What We Audit
We look at financial documents, accounting and employment records that are required by law (RCW 50.12.070). We will send a letter detailing what we need. We typically review:
- Payroll, accounting and employee time records
- Business ownership records and licenses
- Bank records, financial statements, check registers, general ledgers and invoices
- State and federal tax records, including IRS Form 1099s
- Subcontractor registration numbers, copies of contracts and invoices
- Corporate officer opt-in forms
We look for proper reporting of your employees and independent contractors. We also ensure compliance with unemployment-insurance laws and rules including RCW 50.04.100, RCW 50.04.140, RCW 50.04.270, RCW 50.04.320, and RCW 50.12.070.
Preparing for an audit
- Watch the video, How to prepare for an audit
- Read about working with ESD tax specialists during an audit
- Read common audit findings
- Find out what happens after an audit (PDF, 71KB)
Appealing audit findings
Selecting businesses for audit
US Department of Labor requires the agency to conduct compliance audits annually.
- We analyze data from multiple agencies for patterns of inconsistent reporting.
- We audit companies in industries who historically show a high level of non-compliance.
- We audit employers who transfer ownership and reclassify the business type.
- We investigate reports of fraud submitted by citizens.
- We audit employers randomly selected by computer (about 10 percent of our total).