We conduct pre-audit insurance assessments, perform expert evaluations to ensure that employees’ social security rights are fully observed by employers, and verify compliance with social security laws regarding contracts and wage payments.
What is Insurance Audit?
Insurance auditing, or more specifically, social security auditing, plays a crucial role in the lives of workers, employees, and individuals who are mandatorily insured, because paying social security premiums is a key measure that ensures access to social welfare services, living security, and healthcare benefits for insured individuals and their families.
In line with this, insurance inspections conducted by the Social Security Organization aim to identify and safeguard the insurance rights of workers and employees. The social security insurance audit is carried out with two main objectives:
1- Ensuring that employers comply with employee insurance rights:
This is verified by reviewing payroll-related documents, including the Social Security insurance report and, in some cases, the payroll tax reports of employees.
Ensuring compliance with social security laws regarding contracts and wages
According to social security law, an employer (or their representative) must provide the requested documents to inspectors. The inspector then examines the accuracy of the provided information by comparing it with social security laws and regulations. Payments made to persons other than insured employees of the company are subject to Social Security contributions, and businesses must account for this at the time of payment. To verify compliance, inspectors review contracts, wage payments, commission-based invoices, and service invoices containing commissions.
The legal framework for social security auditing is detailed in Article 47 of the Social Security Law, which we will review in full below:
Article 47 of the Social Security Law
Employers are required to provide wage, salary, and benefits records of insured employees, as well as the necessary documents and ledgers, to the Social Security Organization’s inspector upon their visit. Inspectors have the right to take copies or photographs of all or part of these records. Additionally, they may consult with any managers, employees, or workers of the workplace, as well as relevant authorities, to obtain necessary information.
Social Security inspectors are authorized to inspect workplaces subject of this law. They hold the same powers and responsibilities outlined in Articles 52 and 53 of the Labor Law. The results of the inspection must be communicated to the employer within a maximum of two months by the Social Security Organization.
Types of Insurance Inspections
1- Workplace Inspection: Conducted to identify productive workers and laborers.
2- Official Books Inspection: A type of insurance audit of official accounting books.
Insurance inspection is essentially an expense-based audit, whereas tax auditing primarily examines the income of a company or business. In tax audits, the focus is on revenue, with expenses deducted from a company’s income.
In contrast, in insurance audits, through inspection of official accounting books, work-related expenses are measured, and other income and expenditures of the business are not included.
An insurance audit or statutory audit reviews a company’s financial records for one fiscal year to identify any unpaid insurance liabilities. The employer’s outstanding social security debt is calculated, and they are given one month to settle the amount. If the employer fails to pay or delays payment, a penalty of 2% per month will be applied to the outstanding insurance debt.
Items Subject to Insurance Auditing
1. All amounts paid as wages, salaries, and statutory benefits to workers and employees.
2. Payments made to contractors, including cases where a clearance certificate from the Social Security Organization has not been obtained.
3. Any fees or compensation paid to individuals or legal entities.
It is worth noting that some exceptions exist, and certain payments are not subject to social security contributions.
One of the common issues in this area is that many employers do not maintain official accounting records, mistakenly believing that the absence of such records works in their favor and will result in lower insurance payments during audits.
However, this is a misconception—insurance contributions are determined and collected based on tax information obtained through inquiries from the Tax Administration. In fact, maintaining official ledgers often leads to lower insurance costs compared to cases where no official records exist.
Large companies and institutions require expert auditors to manage their affairs. By entrusting their financial matters to experienced auditors and conducting preliminary audits, they can Accurately determine their insurance liabilities, avoid overpaying beyond legal requirements, prevent financial penalties, and significantly reduce their total insurance costs.