Navigating a benefit contributions audit can feel daunting, even for seasoned production companies. These audits are designed to ensure that productions have correctly calculated, reported, and contributed pension, health, and individual account plan (IAP) benefits on behalf of covered employees under union agreements like IATSE, Teamsters, SAG-AFTRA, and WGA.

Failing an audit can mean owing hundreds of thousands of dollars in unpaid contributions, late payment penalties, interest, and sometimes even triggering costly legal battles. But with the right preparation and understanding, productions can not only survive a pension and health audit, they can actually come out stronger, more compliant, and with improved processes for the future.

Here’s what every production needs to know to survive a benefit audit and protect its bottom line.

1. Understand Why You Were Selected

An audit is not necessarily a red flag. In most cases, it is standard practice. Union benefit funds like the Motion Picture Industry Pension and Health Plans (MPIPHP) have audit rights outlined in the collective bargaining agreements. Generally, audits occur every year or after the completion of a project, especially for new employers.

Common triggers for an audit include being a new signatory company, reporting lower-than-expected contributions compared to union work records, having gaps in contribution history where crew were working but contributions were not made, or simply being selected randomly based on internal MPI criteria.

Understanding the reason for your audit helps you mentally frame it. It is about compliance, not punishment, unless something serious is uncovered.

2. Know What the Auditors Are Looking For

MPI auditors are trained to verify whether all covered employees were properly reported, wages were correctly calculated and categorized, pension, health, and IAP contributions were made timely and accurately, proper contribution rates based on agreements were applied, and whether there were any missed work periods or misclassified payments such as idle days improperly excluded from pensionable wages.

Auditors will ask for extensive documentation. You should be ready to provide payroll registers, timecards, deal memos, start paperwork, union contracts, fringe reports, and general ledger details, particularly payroll accounts. If there are discrepancies, such as missing contributions, incorrect rates, or hidden forms of compensation, you can expect the fund to assess back payments along with penalties and interest.

3. Build a Strong Pre-Audit File

Your best defense in an audit is preparation before auditors even show up. A strong pre-audit file should include full payroll records showing gross wages, deductions, net pay, and fringe reporting. Signed start paperwork identifying union affiliation, deal memos clearly listing negotiated terms, timecards showing hours worked and location codes, fringe benefit reports filed with payroll, copies of union contracts or summaries of rates used, and employer contribution reports submitted during production should all be organized and accessible.

You should be able to show a clean chain of custody from hire to payment to contribution. If you are not keeping this documentation digitally organized during the show, you are already making life harder when the audit notice comes.

4. Watch Out for Common Mistakes

Even productions with good intentions often trip over common mistakes. Misclassifying covered employees as non-covered is a frequent problem, especially when productions try to claim someone is an independent contractor when they are clearly part of the bargaining unit. Another common issue is failing to pension all gross wages, particularly overtime, penalties, box rentals, and certain penalties.

Incorrect contribution rates applied to the wrong job classifications are another frequent audit finding. Productions also sometimes miss contributions on side agreements, overscale pay, or buyouts, or use the wrong work state or tax codes which can impact contribution amounts.

Productions often mistakenly believe they only owe pension and health contributions on straight-time hourly wages. However, in most agreements, overtime, sixth and seventh day premiums, and certain penalties must be included as pensionable earnings. Even if the payroll company missed it, the production is still liable.

5. Understand the Timeline and Process

A typical audit process begins with an audit notice. You will receive a letter from the benefit fund requesting specific records for a defined period. Then the fieldwork phase begins. Auditors will review your records, either remotely or onsite, and may interview your staff, especially if there are missing documents.

After reviewing the records, the auditors will issue preliminary findings. If discrepancies are found, you will get a preliminary report detailing amounts due. Productions typically have thirty to sixty days to dispute findings, provide additional documentation, or negotiate settlements. If unresolved, the benefit fund will issue a final assessment, including principal, penalties, and interest.

Throughout the process, it is critical to communicate professionally and promptly with auditors. Delays or defensive behavior tend to invite deeper scrutiny.

6. Assemble Your Response Team

When facing an audit, it is important to assemble a strong response team. Your payroll accountant or service provider contact who processed the payroll should be included. You should also have employment or labor experts familiar with entertainment union compliance involved. Additionally, having a labor relations consultant who can help interpret contract nuances and flag misapplication issues can be invaluable.

In many cases, productions have successfully reduced their audit exposure by proactively showing that alleged mistakes were consistent with past practices, permitted under side letters, or were reasonable interpretations of ambiguous collective bargaining agreement provisions.

Going into a complicated audit alone is risky. Having the right team in place can save you exponentially more than the cost of assembling it.

7. Know When to Negotiate

Not all audit findings are black and white. If the benefit fund alleges underpayments, productions often have grounds to provide missing documentation to prove contributions were made, argue for a reasonable correction period without penalties, request penalty waivers or reductions based on good faith efforts, or negotiate lump sum settlements if there are disputes over ambiguous classifications.

For example, if a production clearly made a payroll error but self-corrected it as soon as it was discovered, the fund may be willing to reduce penalties in exchange for prompt payment. Benefit funds want compliance, not endless legal battles, so negotiations are a common part of the process.

8. Learn and Improve for the Future

Every audit provides a roadmap for strengthening your compliance going forward. After the audit wraps, productions should conduct an internal post-mortem review. Updating onboarding and payroll procedures is critical, as is training production accountants, paymasters, and department heads on contribution rules.

Productions should also audit their payrolls internally at project wrap, before MPI has a chance to find problems. Smart productions use the audit findings as a checklist to improve controls, not just for MPI, but for future WGA, DGA, SAG-AFTRA, Teamsters, and other audits as well.

Final Thoughts

Surviving a benefit fund audit is not about avoiding scrutiny. It is about preparation, precision, and professionalism. Productions that prioritize accurate reporting, maintain airtight documentation, and build strong relationships with labor experts will not only survive the audit process but will position themselves as preferred employers in an industry where compliance is increasingly under the microscope.

In today’s climate, labor unions are more aggressive about enforcing benefit contributions than ever before. Productions cannot afford to treat pension and health obligations as an afterthought. The cost of non-compliance can be enormous, but the cost of preparation is far smaller.

If your production is facing an MPI audit, do not panic. Prepare, partner with experts, and stay proactive. The smoother your audit, the stronger your reputation in the motion picture industry.