Employment and Training Administration
Washington, D. C. 20210






May 11, 1993




July 31, 1993











Administrator for Regional Management




Training Program For State Unemployment Compensation (UC) Tax Field Auditors

  1. Purpose. To advise State Agency Administrators that the Employment and Training Administration (ETA) is nearing completion of a training program for UC Tax Field Auditors, designed to complement State UC tax compliance training, to announce Train-the-Trainer Seminars for State staff responsible for auditor training.

  2. Reference. Employment Security Manual (ESM), Part V, Section 3670-3693, Field Audit Function (ETA Audit Policy); Core Revenue Quality Control, Operations Handbook.

  3. Background. The role of the field auditor in administering a compliance program under State UC laws requires a high degree of technical knowledge covering State and Federal employment taxes and acquired investigative skill. Depending on individual State approaches to auditor training, acquired knowledge and skills are often reflected in varying degrees of auditor productivity and inconsistent audit quality.

    The need for a broader approach to field auditor development, beyond their own State UC law and rules, has frequently been expressed by State UC tax managers at National and multi-Regional Tax Conferences and has also been recommended by Federal and State auditors. The variables in payroll control, employer-employee relationships and remuneration for individual services cannot be monitored efficiently unless the auditors' education includes background familiarity with the larger arena of Federal employment tax laws and the interrelationship of similar but unique State UC tax programs.

  4. State UC Tax Field Auditor Training Program. A field auditor training program which focuses on issues beyond a single State's UC law and rules, is nearing completion. The program, developed under a cooperative agreement with the Indiana Department of Employment and Training Services (IDETS), will provide States a special supplement of broad based instruction that will complement existing State UC tax compliance training for UC field tax personnel. The training program will:

    1. Provide State UC compliance staff with a working knowledge of the Federal Unemployment Tax Act and other related Federal employment tax applications;

    2. explain ETA audit policy provisions and the Federal interest in UC audit performance;

    3. encourage interstate cooperation in compliance efforts;

    4. improve professionalism in audit performance and report integrity, and discuss Generally Accepted Auditing Standards (GAAS) and their application in payroll and tax compliance audit applications: and

    5. raise the level of auditor awareness of outside influences on employment tax administration, through tax avoidance, employment practices and legislation.

  5. Development. Many State UC tax experts have participated in the program design and development. All States were surveyed for input as to their existing policy on field audit operations, auditor training programs and desired subject matter for supplemental training.

    A workshop comprised of experienced UC tax compliance experts from twenty-five States representing each of the ten ETA regions reviewed options resulting from the survey and provided guidance on desired or needed training and audit program development.

  6. Design. The training program under development is structured to be folded into existing State training with an introduction Federal employment tax law, ETA policy on UC auditing, meeting State quality control requirements and the inter-dependence of the States' UC tax programs.

    Subject matter will be broad based and include, but not be limited to:

    1. The Federal Unemployment Tax Act (FUTA) and related< employment tax provisions of the Internal Revenue Code and Social Security Act referred to in FUTA;

    2. the inter-relationship of Federal and State roles in unemployment tax programs and the value of inter-State cooperation;

    3. an explanation of Generally Accepted Auditing Standards to the extent they apply to payroll and the limited financial auditing practiced in UC tax compliance audits;

    4. all elements of current ETA audit policy (ESM, Part V, Sections 3670-3693 (as revised) and the proposed Revenue Quality Control audit quality requirements;

    5. working relationships often designed to circumvent standard employment classification tests;

    6. examples and explanations of special provisions in Federal and State laws that either extend or restrict worker coverage and employer tax liability;

    7. trainee introduction to the central office processes for which he/she provides support, such as, status, cashiering, employer accounting, delinquency/collections, computer services available to the auditor; and

    8. instructions for setting up and closing out of an audit assignment. This includes making the appointment, the entrance interview, closeout interview, auditor's report and the central office review.

    The training program for State UC tax auditors will be in standalone modules that may be used, in the whole as a phase of, or to complement training for State tax staff, or in parts to supplement existing State training formats. As a complement to State training programs, the modules will focus primarily on expanding the trainees' knowledge of outside factors and audit approaches that contribute to the overall effectiveness of their State tax compliance programs. Each stand alone training module will have a trainee and a corresponding trainer section.

    The training modules package will consist of:

    1. A supervisory executive summary to provide SESA management with a training program overview;

    2. an instructor's manual that follows each module and training unit, with desired results to exercises and options available to auditors in coverage issues;

    3. a student manual with text and exercises designed to carry a trainee step-by-step through each module;

    4. video instruction to enhance trainee understanding of the subject matter; and

    5. all texts and printed material on floppy disks in a flat ASCII format.

    Trainer and student manuals for each unit will include test exercises to familiarize trainees with application of the procedures and principles covered in that unit. These test exercises will help instructors measure trainee comprehension of the training material. All modules will contain transparency and flip chart masters for use in group training sessions. The complete training program package will be made available to each State in reproducible units.

    Program Delivery. Three Train-the-Trainer sessions have scheduled for State staff who are responsible for auditor training and/or performance in their respective States. Such individuals should attend one of the three sessions that have been scheduled as follows:

    May 18-21 Atlanta, Georgia
    June 15-18 Denver, Colorado
    June 22-25 Indianapolis, Indiana

    The Indiana Agency and its contractor, The White River Training Company, will provide you directly with specifics on the training sessions. Hotel accommodations will be provided by the contractor. Trainers will be responsible for transportation, meals and other travel expenses.

    Attending a Train-the-Trainers session is essential to the success of the program because it will provide State trainers with specific knowledge and skills to deliver the program and guidance to develop related State-specific material for their auditor training programs. The Train-the-Trainers sessions will also enhance State trainers' knowledge of Federal and multi-State employment tax interface that they may not have exposure to in their own programs.

  7. Action Required. State Agency Administrators are requested to:

    1. Provide the information in this Directive to their UC Directors and/or appropriate tax managers and training officers;

    2. select individuals to be responsible for implementation and integration of the program into their auditor training program: and

    3. assure that individuals who will be conducting the training attend one of the three train-the-trainer sessions.

  8. Inquiries. Questions should be directed to the appropriate Regional Office.