Preparation for future audit
The Ministry of Social Development (MSD) has commenced audit activity on businesses that have claimed the wage subsidy. We recommend that, if they haven’t done so already, businesses should collate relevant information now and keep it on file to support their claim and be in a strong position to promptly respond to any MSD questions.
Businesses should respond to an audit from MSD in a clear and concise manner, in a way that demonstrates they have considered and met each of the relevant requirements. If there are any areas of subjectivity these should be clearly explained, and the evidence supporting the ultimate decision made by the business included within the response.
Given the subjectivity that can apply when considering a number of the wage subsidy principles, we recommend that businesses should strongly consider having their claim independently evaluated in preparation for potential MSD audit activity or other stakeholder queries. An independent review should provide more comfort to key stakeholders that the business has done the right thing, and also prepare the business for future correspondence with the MSD by highlighting what information may be required/missing in order to support claims.
We can help with this process. Our Wage Subsidy Scheme support framework includes:
- Standard templates for businesses to fill out in order to evidence a claim
- A standardised application evaluation methodology based on our extensive knowledge of the subsidy and awareness of key risk areas which the MSD are more likely to challenge
- Individual application gap analysis, and
- Assistance with resolving identified issues.
Specific areas that can be contentious, and which should be considered include:
- Confirmation that the entity is not precluded from the Wage Subsidy Scheme
- The financial analysis supporting the revenue reduction
- How employee's have been determined as working less than or greater than 20 hours per week, and if individuals are on variable pay or have allowances, how have these been taken into account when determining that the full value of the Subsidy has been paid through to employees
- That any concerns over public perception or reputational risk and the rationale for progressing the claim are clearly stated
We would also consider the narrative around responses to questions from interested third parties, and the recommendations made to the Executive and other /stakeholders around any risks and the legitimacy of the claim.
Guiding principles and how we can help
Wage Subsidy support was introduced rapidly in response to the COVID-19 Alert Levels 3 and 4. With no legislative framework underpinning the original scheme, or subsequent extension, it is important that employers understand the core principles to guide their decision making.
Those guiding principles are that throughout the subsidy periods claimants:
Apply their “best efforts” to ensure employees retain their employment.
Provide accurate information to support a valid claim.
Ensure that if circumstances change and they cease to be eligible in full or in part, that this is communicated with MSD.
Apply their "best efforts" to pay employees at least 80% of their normal salary and wages where possible.
Act in good faith with their employees.
The key rationale for the initiatives was that the Government wanted to support businesses and provide job security to employees through this unprecedented time.
We can assist with:
Preparation for a future audit by MSD
Employee and key stakeholder communication protocols
Providing an independent evaluation for your claim
Planning for the future
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Contact us
Partner and Asia Pacific Leader in Generative AI, PwC New Zealand
Tel: +64 21 820 945
