The very words “compliance audit” are enough to send chills down the spines of many entrepreneurs and business executives in the state. Why do many people get anxious at the thought of having their businesses audited by compliance agents? It may be because they are aware of the tough penalties facing non-compliant companies or because they are not 100 percent certain their entire company operations are compliant with federal and state regulations.
If you are having doubts as to whether your company’s top-down operations comply with the law, reach out to an experienced South Carolina compliance lawyer to help you identify non-compliance hotspots.
Why Are Many Companies Not Ready for Audits?
There are many reasons. Taking first place is the sheer volume of federal and state regulations that companies are subject to. In addition, private sector alliances and professional organizations also have laws governing member companies’ conduct. Together, public and private regulations can fill thousands of pages, many of which are regularly updated. It’s hard for a company executive to keep up with all of them.
Other reasons companies get anxious about compliance
What Are the Hotspots for Non-compliance?
When compliance auditors from the Office of the Inspector General, the Department of Labor, the Equal Employment opportunity Commission or the IRS come knocking, here are some of the go-to areas they start with:
Employment and labor law policies. Does the organization comply with labor laws relating to working hours, working conditions, compensation, human rights, underage
In addition, employees must comply with anti-trust and competition laws in their respective regions. This means they cannot take advantage of customers, suppliers or competitors through manipulation or misrepresentation. Do employees conduct themselves fairly?
Regulatory compliance. Does the company abide by federal, state and municipal legislations? Does the company comply with the US Environmental Protection Agency’s laws on toxic waste disposal? Does it abide by federal laws on charging of credit cards?
Securities laws. If the company is a public company, are all its disclosures full, accurate, fair and comprehensible? Do all employees maintain confidentiality when privy to non-public information?
Tax compliance. Many audits in the United States are actually done by IRS agents. They examine business and tax returns for signs of non-compliance. Often, companies get blacklisted after these audits because the IRS calculates tax returns using the Internal Revenue Code, which is significantly different from the general accounting principles used by business owners and accountants.
State agencies can also perform tax audits to ensure businesses pay state income tax. They check whether a business is collecting sales tax on applicable transactions and whether it is remitting all taxes to the appropriate agencies on time.
In addition, as many as 46
percentof companies wrongly classify their independent contractors, causing them to understate their taxes and insurance costs.
Many compliance errors are not done willfully or knowingly, but rather out of a lack of knowledge. Sadly, ignorance of the law is not a defense. This is why companies should take steps to boost their compliance practice by working with an experienced South Carolina corporate law attorney at Willcox, Buyck & Williams, PA. Schedule a consultation today.