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Plan Audit Process Includes 401k Partners

Plan Audit Process Includes 401k Partners

Plan Audit processes are required for some 401k plans based upon size or the number of company employees.  When it comes to audits, most entities being audited want nothing more than to have the audit be concluded and to receive a passing grade.  But, exactly how deep should such audits probe?  Is there actually a bigger benefit to the plan when auditors “find something” worth reporting to the plan fiduciaries?  At the conclusion of a Plan Sponsor University (TPSU), Fiduciary Education Program held at Butler University, in Indianapolis, Indiana, Fred Barstein, TPSU Founder and CEO, spoke with Gwen Stoute, CPA and Employee Benefit Plan practice-leader at HoganTaylor, LLP, CPAs.  (HoganTaylor, LLP is an independently owned local and regional accounting, consulting and service firm.)  Ms. Stoute served as an expert speaker during the TPSU Program at Butler University. In this 401kTV clip, Ms. Stoute provides valuable insight on how Plan Sponsors should be prioritizing when deciding to work with a retirement plan advisor – all from a plan auditor perspective.

Full Transcript Here

Fred Barstein:
Fred Barstein with 401k TV and I’m here in Butler University in Indianapolis with one of our speakers, out panelist, Gwen Stoot and she is from the accounting firm of Hogan Taylor, which is based in the Midwest to South Midwest. Welcome, Gwen.

Gwen Stoot:
Thank you.

Fred Barstein:
So, their firm has over 300 professionals and Gwen is in charge of their employee benefits, which includes audits. So, before we … let’s talk a little bit about what we talked about the program is what the DOL, some of the things that they’re focused on when they come in audit plans and one of the things you mentioned was about looking at the quality of the service providers, particularly the advisor, and the qualifications, as well as, their auditor. So, what are you seeing out there?

Gwen Stoot:
Well, I think one of the things the DOL is looking at is when plan sponsors are hiring professionals to service the plan. Are they qualified? The DOL did an audit quality study maybe four or five years ago and one of the things they looked at is if the auditor specialized in that type of audit, not only auditors but also investment advisors. Are they familiar with that type of plan?

Fred Barstein:
And so, it’d be common to say, okay I have an accountant, go to that accountant and say, do you do audits? And they say, oh yeah, sure, but they don’t really specialize in it.

Gwen Stoot:
That’s right.

Fred Barstein:
And that’s a very unique specialty.

Gwen Stoot:
It is. The DOL likes to call them dabblers, where you only do a couple, not enough to really specialize in it.

Fred Barstein:
Sure. And same thing with advisors, right?

Gwen Stoot:
Exactly.

Fred Barstein:
And so what’s the repercussion if somebody hires someone, from a DOL, if they say, okay the auditor, the advisor is not qualified, what are some of the repercussions for them?

Gwen Stoot:
Well, the repercussion would be if your audit was not done to standards, then your 5500 could be rejected, the penalty to the plan sponsor could be significant. I mean, usually, the penalty letter is like $50,000. You could have to have another audit done. The auditor has one chance to submit the work papers to the DOL when they get selected and the DOL will look at it and make sure it was done according to standards, if it wasn’t they will reject the 5500 filings. So, it’s very important to make sure your auditor is properly licensed, specializes in benefit plan audits.

Fred Barstein:
And maybe ask how many they do a year.

Gwen Stoot:
How many they do, right.

Fred Barstein:
And the AICPA, I think, has a list as well, don’t they?

Gwen Stoot:
That’s right. The AICPA has an audit quality center and you can look on there to see whether or not your auditor participates in that.

Fred Barstein:
Well, good. Well, thanks for your time.

Gwen Stoot:
Thank you. Thank you for having me.

Fred Barstein:
Sure. Thanks for participating and thank you for watching 401k TV, stay tuned.

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