Preparing for Your General Liability Premium Audit: Sales Based Audit FAQ and TIPS

You will be informed of specific documents needed prior to the audit, but in general: individual earning records, general ledger, or financial statements. Review the required documents section to see examples of documents and records needed which varies based upon your type of policy.  

  TIP:
Maintain up-to-date records and save them in a paper or electronic audit-designated folder. 

A Premium Audit representative must review information documented in sales records (primary source) and verify these against numbers recorded in tax forms (verification document). You may be requested to provide information from other data sources such as your sales journal, income statements or profit and loss statements, etc. to determine other income not reflected in the primary source document. These documents are confidential and only used for the purpose of completing the premium audit. 

  TIP: The source document should match as closely to your policy period as possible. For payroll reports, you can round to the first of the month (it is acceptable to deviate from the policy period by 30 days). For example, if your policy period is 6/15 - 6/15, you can provide sales records for 7/1 to 7/1 or 6/1 to 6/1.

   TIP: For verification documents, if your policy period falls in the middle of the month, simply provide the most recent four filed quarterly (or annual) tax reports that most closely aligns with your policy period.

If your sales report doesn't match your policy term, you can round the sales report to the first of the month. For example, if your policy period is 6/15 - 6/15 you can provide payroll for 7/1 to 6/30 or 6/1 to 5/31. 

 TIP: It is acceptable to deviate sales records from the policy period by 30 days.  

Yes, we will need to review your tax records, such as state sales tax returns, income statements or federal tax returns. Your records are confidential and used only for the purpose of completing the premium audit. Visit the required documents section to see examples of documents and records needed which varies based upon your type of policy.  

 TIP: Keep copies of filed tax forms applicable during your policy term. If your policy period falls in the middle of the month, simply provide the most recent four filed quarterly (or annual) tax reports that most closely aligns with your policy period.

Advise your agent or producer. Your policy may need to be endorsed to reflect the new exposures. For assigned risk coverage, some states may not be added to your policy. Contact your agent or producer or company representative for additional information. 

 TIP: Inform the auditor of changes to your operations. For assigned risk coverage, inform your producer or company representative.