The Compensation Fund audits employers to check that what you declared matches what you actually paid your people. Most employers meet one the same way: not with a letter, but with a Letter of Good Standing that will not come through, days before a tender closes. An open audit is the quiet reason.
What a COIDA audit actually is
COIDA runs on self-declaration. You register as an employer within seven days of taking on your first employee (section 80), then declare your annual earnings to the Compensation Fund (section 82). The Fund assesses you on the figures you supply, and issues a Letter of Good Standing once the assessment is paid.
Nothing in that chain verifies your numbers at the time. The audit is where the Fund goes back and checks. The Compensation Fund employs inspectors for exactly this, and through 2026 the Department of Employment and Labour has been running joint blitz inspections alongside an ongoing Compensation Fund anti-fraud campaign. So an audit is not necessarily a sign that you are suspected of anything — it is the verification step catching up with the declaration.
What the Fund asks for
Expect a request for four things: your completed salary return, the account or Notice of Assessment the Fund issued, proof of payment, and your current Letter of Good Standing.
Those four are the paper trail. What the audit is really testing sits underneath them: your personnel and earnings records — the payroll the declaration was built from, your employee list, and the payslips you are required to issue. If the declared figure and the payroll do not reconcile, that gap is the audit.
Why it holds up your Letter of Good Standing
This is the part that surprises people. You can have submitted your Return of Earnings on time and paid your assessment in full, and still not get a letter, because the Fund generally will not issue one while a query on the account is open. The audit does not have to conclude against you to block you. It only has to be unresolved.
If you are in that position right now, it is worth confirming what the Fund actually shows against your number before assuming the audit is the cause — you can check your Letter of Good Standing free and see whether one exists, when it was issued, and when it expires.
What goes wrong most often
Earnings declared on the wrong basis. COIDA earnings are not the same as your payroll total. Directors’ remuneration, subcontractors, casual staff and commission are all places where employers apply a different rule to the one the Fund expects, in good faith, and end up under- or over-declaring.
The industry classification no longer fits. Your assessment tariff comes from your nature of business. If what you actually do has drifted from what you registered — and over a few years it usually has — the audit surfaces it. That is a reclassification, and it changes what you pay going forward.
Payments made but never allocated. An EFT that reaches the Fund without the correct reference sits unallocated. Your bank statement says paid; the Fund’s account says arrears. An audit is often where this is finally noticed, sometimes years later.
Records that cannot be produced. A figure you cannot evidence is, for audit purposes, a figure you did not declare properly. This is the one that turns a short query into a long one.
How to close one out
Reconcile before you reply. Put your declared earnings next to the actual payroll for the same period and find the difference yourself. Going into an audit without knowing your own number is how a small discrepancy becomes an open-ended enquiry.
Answer with the paper trail, not an explanation. Salary return, assessment notice, proof of payment, payroll. Where a payment was made but not allocated, the proof of payment is the whole argument — the Fund can allocate it once the reference problem is identified.
Deal with the outcome separately from the audit. Closing the audit and agreeing what you owe are two different steps. If the revised assessment is more than you can settle at once, an instalment arrangement can be agreed — you would normally pay a portion upfront and the balance over agreed instalments, on the Fund’s terms. This matters more than it sounds: the Fund issues a Letter of Good Standing once the current Return of Earnings is filed and the assessment is either paid or under an arrangement. An arrangement can put you back in good standing without settling the whole amount first.
If the figure itself is wrong, dispute it. An assessment raised on the wrong tariff or on misstated earnings is not a payment problem. See our guide on disputing a COIDA assessment for how that works, and the COIDA calculator if you want to sanity-check what the figure should have been.
When it is worth getting help
A clean audit — your records reconcile, one document was missing — is something most employers can answer themselves. It is worth paying someone when the declared figures and the payroll genuinely do not match, when the query has already been open for months, or when a tender deadline means you cannot afford to learn the process as you go.
ClearComply does not audit anything and does not act for the Compensation Fund. What we do is put you in front of a registered labour practitioner who resolves the query with the Fund on your behalf. Audit resolution is R7 200, all in, and the practitioner deals with the Fund directly. Tell us what the Fund has asked for and you will get a straight answer on whether it needs help at all.
Check where you stand first
See whether the Fund currently holds a valid Letter of Good Standing against your certificate number. Free, no signup.
Check my Letter of Good StandingQuestions we get asked
Does an audit mean I have done something wrong? Not by itself. The Fund has said it is visiting premises to verify compliance generally, so an audit can arrive without any specific allegation behind it.
Can I just wait for it to go away? No. The query stays open, and your Letter of Good Standing stays blocked while it is. COIDA also provides for fines where earnings are declared late or an assessment is paid late, and an audit that finds under-declared earnings can produce a revised, higher assessment.
Who at the Fund do I deal with? Queries go through the Compensation Fund call centre on 086 010 5350 or cfcallcentre@labour.gov.za. Online, there are two systems and people routinely confuse them: you register for Departmental Access at cfonline.labour.gov.za first, and your returns, letters of good standing and claims are then handled in CompEasy at compeasy.labour.gov.za. CompEasy replaced the old Umehluko system in October 2019.
ClearComply is a private commercial software provider and is not affiliated with, authorized by, or an official agency of CIPC or any government entity. We are not the Compensation Fund or the Department of Employment and Labour. Letters of Good Standing are issued by the Compensation Fund, not by us.