What is Social Security Insurance Audit

What is Social Security Insurance Audit?

Social Security Insurance audit is similar to tax audits, but it focuses on ensuring that the social security contributions made by employers for their employees are paid in full and transparently. According to experts from Zarrin Taraz Golestan Accounting Firm, the process begins when an audit request notification is issued to the company by the Social Security Organization. This notification asks for certain financial information and details of the company and board members, marking the start of the audit process.

Here’s a breakdown of the process:

1. Initial Steps: After completing the requested information and sending it to the Social Security Organization, auditors visit the company to collect documents and start the verification process.

2. Document Review:

   • Payroll Lists: Auditors first review the company’s payroll and the social security contributions made. If the insurance list is not sent to the organization or does not align with the actual payments, the company faces penalties.

   • Contracts: Contracts related to work and sales must be presented to auditors. For example, if a manufacturing company makes medical equipment, employees involved in production must be insured under the respective contract project to prove the proper payment of social security contributions.

3. Audit of Other Financial Documents: Other financial documents like invoices and accounting records are also checked for compliance with social security regulations.

4. Penalties: Companies that fail to comply with social security regulations (e.g., not sending the right insurance list or not properly registering commissions or bonuses) face penalties. For instance, if commissions or bonuses are paid but not included in the social security list, the company is subject to a 30% penalty on those benefits.

5. Audit Deadline: Social Security audits typically begin after the fiscal year ends and tax returns are filed, and they may extend into the following year. Companies seeking to receive clearance for contracts must undergo this audit if penalties are claimed.

6. Objections: After the audit, if a company disagrees with the declared debts or penalties, they can file an objection within the given time frame.

7. New Regulations: Social Security regulations are updated periodically, and new directives are issued by the organization to ensure the auditing process is clearer and more efficient for employers and the auditing body.

Benefits of Social Security Insurance Audit:

• It helps preserve the rights of insured employees by ensuring proper contributions are made.

• It prevents social security fraud by employers.

• It increases the revenue of the Social Security Organization through the collection of overdue contributions.

In conclusion, companies must pay their employees' insurance contributions on time, properly register contracts, and comply with social security laws to avoid penalties. To prevent issues and ensure compliance, it’s recommended to consult with experts in accounting and insurance.