Audit System Manual graphic

[ Audit System Manual- TOC ] [ Ch 1 - Introduction ] [ Ch 2 - Preparing for an Audit ] [ Ch 3 - Conducting the Audit ] [ Ch 4 - Completing the Audit Forms and Schedules ] [ Ch 5 - Audit System Screens ] [ Ch 6 - Miscellaneous ] [ Ch 7 - USDOL - Tax Performance System ] [ Ch 8 - Computer Fundamentals & Hardware ] [ Appendix ]
[ 4.1 - Audits Performed by New Hire Tax Employees ] [ 4.2 - Where to Find Audit Forms and Schedules ] [ 4.3 - Assembling the Completed Audit Work Papers ][ 4.4 - The C-51 Field Audit Report ] [ 4.5 - Schedule One (C-51E)  & Schedule One (C-5G) Audit Summary ] [ 4.6 - Schedule Two (C-51F) Verification of Payroll Posting ] [ 4.7 - Schedule Three (C-51G) Search for Additional Wages ] [ 4.8 - Review Process for Audits and for the Audit Program ]

Chapter 4:  Completing the Audit Forms and Schedules

comments to: Tax Department

4.5    Schedule One (C-51E)  & Schedule One (C-5G) Audit Summary

[ 4.5.1 - Schedule One Summary Fields] [ 4.5.2 - Schedule One Fields ]

A blank copy of Schedule One is located in the Appendix Section of this manual.

The Schedule 1, Schedule 1 Summary, and Schedule 2 work together to verify acknowledged payroll.

The Auditor must show the comparison of a payroll record (which was established as correct through verification of the payroll posting system on Schedule 2) to the total wages reported on the employer's copy of the quarterly report, and to the amount posted to TWC's wage record system.

Variances or differences between the state audited amounts and the state reported amounts must be explained. Variances or differences between amounts on the federal reports and state-audited amounts must also be explained.

Schedule 1 must also show the name of the payroll records examined, the calculation of total payroll, the calculation of taxable payroll, reconciliation of these amounts to the employer's copy of the quarterly report and to the Agency's wage record system. Variances or differences must be explained.

Audit Work Papers Schedule 1 Summary

4.5.1    Schedule One Summary Fields:

EMPLOYER NAME The employer's name.
AUDIT SCOPE The audit period, i.e. 1/1/YY -12/31/YY.
ACCOUNT NUMBER The employer's account number.
TOTAL AUDITED Displays the audited total and taxable wages by quarter.
REPORTED WAGES Displays the total and taxable wages as reported by the employer for each quarter.
WAGE DIFFERENCES Displays the difference between the audited total wages and the total wages reported by the employer, plus the difference between the audited taxable wages and the taxable wages reported by the employer.
WAGES UNDER REPORTED Displays the total wages underreported and the taxable wages underreported for each quarter by the employer. Report all amounts underreported by the employer. Do not net the underreported and overreported amounts.
WAGES OVER REPORTED Displays the total wages overreported and the taxable wages overreported for each quarter by the employer. Report all amounts overreported by the employer. Do not net the underreported and overreported amounts.
UNDER/OVER DIFFERENCES Displays the difference between wages underreported and overreported for total wages and taxable wages for each quarter.
FORMS 941/942 Displays total quarterly wages as reported on the Federal Forms 941/942.
W-3 Displays total amount of the W-2's as listed on the W-3.
940/943 Displays total wages reported on the Federal Forms 940 and 943.
TAX RATE/CORRECT TAX Displays the tax rate assigned for each quarter. The Correct Tax is the audited tax amount.
PRIOR TAX PAID Displays the tax by quarter as reported.
TAX DIFFERENCE Displays the difference between the tax as audited and the tax as reported.
INTEREST Displays the interest on the underreported tax.
LATE REPORT PENALTY Displays the report penalty for any late quarterly reports.
PRIOR BAL. $ ADDITIONAL DUE Displays the prior debit or credit balance. Enter the additional tax due or the overpayment of tax by quarter.
COLLECTED Displays the amount collected as a result of the audit.
EXPLANATION OF DIFFERENCES Comment about or explain all differences found during the audit. This includes ALL differences between the federal reports (W-3, 940, 941, etc.,) versus the audited results. These comments will be displayed in the comments and narrative section of the C-51 Field Audit Report.  Reference Chapter 7 – "TPS Acceptance Sample Rationale" Question #4 for additional information.
NO. OF MISCLASSIFIED WORKERS Enter the number of new workers discovered as a result of the audit.
WAGES FOR MISCLASSIFIED WORKERS Enter wages attributed to misclassified workers. The number entered here should only represent wages for the new employees discovered as a result of the audit. It should not include additional wages found for workers who were already acknowledged employees.

Audit Work Papers Schedule 1

4.5.2    Schedule One Fields:

EMPLOYER NAME The employer's name.
AUDIT SCOPE The audit period, i.e. 1/1/YY -12/31/YY.
ACCOUNT NUMBER The employer's account number.
RECORD TYPES Mark the record types used to gather payroll information and perform the 4 required tests of the employer's payroll records.  
Note: Once auditor selects a record(s) on schedule two, the program will automatically mark schedule 1.  If any source documents are marked on schedule 2 the program will automatically mark record 100 on schedule one.    Exception:  When doing an audit (B-27 or 940) where no schedule two is required (all wages added via schedule three), auditor must mark schedule 1 as appropriate.
SOCIAL SECURITY NUMBER List social security numbers of employees.
NAME Enter initials and last names of all employees.
1ST QUARTER TOTAL/ TAXABLE Enter 1st Quarter total and taxable audited wages for each employee.
* Indicate if 1st Quarter amounts were overreported (O), underreported (U), or misclassified (M).
2ND QUARTERTOTAL/TAXABLE Enter 2nd Quarter total and taxable audited wages for each employee.
* Indicate if 2nd Quarter amounts were overreported (O), underreported (U), or misclassified (M).
3RD QUARTER TOTAL/TAXABLE Enter 3rd Quarter total and taxable audited wages for each employee.
* Indicate if 3rd Quarter amounts were overreported (O), underreported (U), or misclassified (M).
4TH QUARTER TOTAL/TAXABLE Enter 4th Quarter total and taxable audited wages for each employee.
* Indicate if 4th Quarter amounts were overreported (O), underreported (U), or misclassified (M).
TOTAL WAGES Enter the total calendar year wages for each employee.
TAXABLE WAGES Enter the total taxable calendar year wages for each employee.
W-2 WAGES List the Federal Form W-2 wages for each employee.
TOTAL AUDITED (ALL PAGES) Enter the wages audited and W-2 wages reported for all pages of the schedule.
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Last Revision: May 06, 2011