(originally published Dec 4, 2015)
Published a year ago, the need to choose your plan auditor with care and not out of familiarity is more important than ever.
Like with their financial advisor, employers sponsoring corporate retirement plans like 401(k)s and 403(b)s sometimes pick the CPA firm they know and work with to perform their plan audit required of all companies with 100 or more eligible employees. But the consequences can be dire as the DOL is focusing on the quality of the audits evidence by a recent message from the agency’s Chief Accountant. [SEE DOL LETTER]
The note states that the DOL had found significant deficiencies in 40% of the audits they reviewed which, “both jeopardizes plan assets and can result in significant civil penalties being imposed on the plan administrator by the DOL.”
So how do you know if your auditor is qualified? Here are some clues courtesy of the DOL:
- The number of employee benefit plans the CPA audits each year, including the types of plans;
- The extent of specific annual training the CPA received in auditing plans;
- The status of the CPA’s license with the applicable state board of accountancy;
- Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the American Institute of CPA’s for investigation; and
- Whether or not your CPA’s employee benefit plan audit work has recently been reviewed by another CPA (this is called a “Peer Review”) and, if so whether such review resulted in negative findings;
Plan sponsors might also ask similar questions about their plan advisor.
The DOL provides help in their publication “Selecting An Auditor For Your Employee Benefit Plan”
