As the accountant for Prestige Home Construction you record your employer’s workers’ compensation costs. At a meeting discussing the year-end financial statements, your boss, Dusty Haynes, says, “We paid over \($15,000\) for workers’ compensation insurance at the beginning of the year. We didn’t file any workers’ compensation claims this year, so we should get a refund this year. But you tell me we have to pay another \($2,000\) to our insurer. What is going on here?”

Required

Write a one-page memorandum to your boss explaining this situation.