Preparing for TERS audits: What employers need to know

Preparing for TERS audits: What employers need to know

Business, Coronavirus Reliefs, Human Resources
TERS, TERS Audit, UIF

The Unemployment Insurance Fund (UIF) is now conducting audits to ensure the legitimacy of claims made under the Temporary Employer/Employee Relief Scheme (TERS). Introduced during COVID-19, TERS provided critical financial relief to both businesses and employees. However, as part of the compliance process, the UIF is exercising its right to audit employers, a clause that was explicitly included in the Memorandum of Agreement (MoA) signed by all businesses when applying for the relief.

This development signals the importance of employers preparing for potential audits by gathering the necessary documentation to substantiate their claims. Failure to provide the required information may result in penalties, or in some cases, a demand for repayment.

What does a TERS audit involve?

During an audit, employers will be required to provide detailed documentation to support and corroborate the claims made for the relief scheme. These audits aim to ensure that the funds were appropriately received and distributed to employees as intended by the scheme. Auditing firms, appointed by the UIF, will be requesting documentation for all periods in which claims were made.

The information requested may include, but is not limited to:

  • Bank statements: Showing the receipt of TERS funds and the subsequent payment to employees.
  • Payroll reports: Detailing the distribution of funds to employees.
  • Employment contracts: For employees listed in the TERS application.
  • Passports for foreign nationals: If claims were made on behalf of foreign employees.
  • Tax clearance certificates: For the relevant period of the claim.
  • Reconciliation of funds: Comparing the amount of TERS funds received versus the amounts paid to employees.
  • Payslips: For employees covered under the claim.
  • IRP5s: For the applicable tax period.
  • EMP201s: Showing UIF contributions during the TERS period.
  • Attendance registers/clocking records: Where applicable, to verify that employees were eligible.
  • Proof of refunds: If overpayments were returned to the UIF.

Why is this important?

The UIF is taking a proactive stance to ensure that the TERS funds were applied correctly. This process is part of the broader effort to prevent fraud and the misallocation or mismanagement of funds. Even if the relief was used in good faith, the burden of proof now lies with the employer to show that the funds were properly handled.

How can employers prepare?

The key to a smooth audit process is preparation. Employers should begin gathering the necessary documents immediately to avoid any last-minute complications. A thorough review of payroll records, bank statements and relevant tax documentation should be conducted to ensure all the required paperwork is in order.

If any discrepancies are found during this review, it is advisable to seek guidance on how best to rectify them before an audit is initiated. Additionally, if refunds have been made to the UIF, ensuring that these are clearly documented will be essential. As these audits continue, it is critical for businesses to maintain proper records for any future claims or benefits. Transparency and compliance will safeguard your business from potential legal or financial repercussions.

Should you require assistance in gathering documentation or understanding your obligations under the audit process, professional advisory services are available to help guide you through the complexities.

By taking the time now to ensure all documentation is ready, employers can ensure compliance and avoid complications during a UIF audit. We are here to help – contact us for assistance.