There are risks to employee benefit plan sponsors if quality audits are not performed for their organizations. Because an incomplete, inadequate or untimely audit report may result in a rejection of form filings and penalties being assessed against the plan administrator, selection of an experienced and reliable auditor is very important. The DOL has the right to reject plan filings and assess penalties of up to $1,100 per day, without limit, on plan administrators for deficient filings. Choosing to hire a firm without knowledge of the specialized nature of the industry and skills necessary to perform plan audits will conflict with the stated goal of ERISA to protect plan participants. Plan administrators should make the selection of the plan auditor a high priority and exercise due care during every phase of the auditor selection process.
Evaluating Auditor Qualifications
One of the most common reasons for deficient accountants’ reports is the failure of the auditor to perform tests in areas unique to employee benefit plan audits. Look for a qualified auditor with expertise in the following areas:
- Evaluating whether plan assets covered by the audit have been fairly valued
- Unique aspects of plan obligations
- Timeliness of plan contributions
- How plan provisions affect benefit payments
- Allocations to participant accounts, if applicable
- Issues that may affect the plan’s tax status
- Transactions prohibited under ERISA
Identifying Quality Audit Firms
AICPA Employee Benefit Plan Audit Quality Center (EBPAQC) member firms show their commitment to providing quality audit services to ERISA plans by voluntarily adhering to higher standards of audit quality in their policies, procedures and training related to the performance of benefit plan audits. Those standards are the benchmark of their commitment to quality performance and client service. For additional information on how to ensure that you are hiring a quality auditor, please follow this link to this AICPA document: AICPA.org.
Larson & Company Provides Quality Employee Benefit Plan Audits
Larson and Company is a member of the AICPA EBPAQC. All of Larson & Company’s employees who work on employee benefit plan engagements are required to complete a certain number of training hours specific to these type of engagements every year. If you would like more information about Larson & Company’s expertise in performing employee benefit plan audits, please feel free to contact Diane Nesbit at dnesbit@larsco.com or (801) 313-1900.