Companies that have received money through the Covid-19 Temporary Employer/Employee Relief Scheme (TERS) may be selected for audit and face legal action for noncompliance, says advisory multinational EY Europe, Middle East, India and Africa People Advisory Services senior manager Ruth Maforimbo.

The Department of Employment and Labour (DEL) has appointed forensic auditors to verify companies’ TERS claims, she confirms.

Audits started in December and are expected to be completed within a six-month period. Many companies have been audited or are currently being audited, she adds.

“Companies who have received money may be selected for audit. The auditors will perform investigations and examine the authenticity of the TERS claims and analyse the financial records of employers, as well as verify whether the money received was accurately paid over to the qualifying employees.”

In terms of DEL communications, companies who applied for and are recipients of TERS must have the required information available, should the auditors initiate the audits.

“If you are selected for audit, we urge employers to cooperate with the appointed forensic auditors and supply all required information within the stipulated time frames. Noncompliance may result in legal action,” Maforimbo warns.

In the event that it is established through the audits that the companies have illegally benefited from the TERS, a legal procedure will be initiated and employers will be obliged to respond. In the event that there is a reporting error, there may be penalties of the total amount plus interest and any legal costs imposed by the DEL.

“The limitation of liability clause in the TERS memorandum of agreement (MoA) states that the liability is uncapped in respect of the damages that the Unemployment Insurance Fund (UIF) will suffer. Since this is not clearly quantified, the employer or company may need to review their specific signed MoA to determine what it stipulated,” Maforimbo adds.

Further, the onus is on the employer or company to furnish the auditors with all of the required information to complete the verification process. Failure to comply with the request for information by the due date may result in adverse consequences with the UIF and other authorities, she points out.

Employers or companies that applied for, and are recipients of the relief scheme, must prepare a UIF TERS information application pack.

“We suggest businesses conduct an analysis and review of their TERS submissions to understand the process followed in order to ensure compliance.

"Whether your business applied for the TERS in-house or used the services of independent consultants, we suggest professional assistance in identifying any compliance issues and risk areas is obtained,” Maforimbo advises.