Frequently Asked Questions

ESAC accreditation provides ongoing verification that a PEO is meeting key financial, ethical and operational standards that are particularly important in the PEO service relationship. Additional business-related credentials also provide methods for checking a PEO's adherence to specific business operations as shown below:

ESAC Accredited & Bonded: PEO accreditation is based on more than 40 important PEO industry standards to confirm a PEO’s service reliability. Accredited PEOs are backed by >$15M in bonding to provide their clients, worksite employees, taxing authorities and insurers with assurances similar to the FDIC for the banking industry.

IRS Certified: IRS certification confirms a certified PEO's payment of its federal employment tax obligations, eliminates a certified PEO client’s federal payroll tax liability for qualified work site employees, and clarifies eligibility for IRC 3511(d)(2) federal tax credits.

Audited Financial Statements: annual audits by an independent CPA reflect a "look-back" at the most recent fiscal year of the PEO’s operations and should include all related PEO entities on either a combined or consolidated basis to ensure the PEO's financial stability is not misrepresented. Statements should demonstrate adequate net worth and working capital, including sufficient financial reserves for any loss-sensitive or self-insured benefit or insurance plans.

State Licensing/Registration: Many states have specific PEO licensing or registration requirements, ranging from minimal to more extensive reporting. States monitor compliance only of the PEO entity(ies) operating in their state and do not monitor compliance of the other PEO entities under common ownership control which limits the effectiveness of a state's ability to pre-emptively detect financial issues that may begin developing in a non-licensed PEO entity. ESAC verifies compliance of all related accredited PEO entities in all states. Due to ESAC’s extensive compliance verification, a growing number of states rely on ESAC's services as part of the state’s PEO licensing/registration program.

SSAE: Statement on Standards for Attestation Engagements provides a set of auditing standards that outline auditor requirements for performing an attestation engagement to report on internal controls of a service organization. Auditors review management-prepared descriptions of a service organization’s procedures and systems and test a sample of each control for its effectiveness. A Type I report expresses the auditor's opinion of the internal controls design effectiveness at a point in time, while the more valuable Type II report covers the internal controls operating effectiveness for a specified period of time.

ISO: the International Organization for Standardization provides a set of requirements for quality management systems, but does not dictate how the requirements should be met in any particular organization. Organizations may engage the services of an independent quality system certification body to obtain certifications such as the ISO 9001:2015 certificate of conformity which verifies the organization is managing its processes effectively.

Workers' Compensation Risk Management Best Practices Certification: This PEO-specific certification program provides independent verification that a PEO is meeting risk management best practices to reduce work-related accidents and health exposures and control WC insurance losses.