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Retirement Plan Auditors that Dabble Create Risk for Plan Sponsors

Retirement Plan Auditors that Dabble Create Risk for Plan Sponsors. Following a Fiduciary Education Program at the University of Georgia Terry College of Business, Bruce McFadden, a Certified Public Account, at the accounting firm Carr, Riggs and Ingram was interviewed concerning the topic of Plan Audits for qualified Plans.  Mr. McFadden brings a wealth of experience having logged 38 years in the public accounting.

While participating as a panelist during The Plan Sponsor University (TPSU) program, Mr. McFadden described the benefits to plan sponsors when working with an auditor who holds membership in the Employee Benefit Plan Audit Quality Center (EBPAQC).

What is the Value of having an EBPAQC Member Conduct your Plan Audit?

Plan sponsors are aware of the Audit requirements for qualified retirement plans.  What most plan sponsor may not be aware of is that auditors are “audited” by the Department of Labor (DOL).   The DOL activity of auditing auditors is making an impact by improving the quality of plans.

Mr. McFadden states “The DOL has found efficiency rates up 40% when they audit the auditors.”  The DOL refers to firms that audit only a few retirement plans per year as dabblers.   “The dabblers do not really respect, or have an understanding of the details or complexities of an employee benefit plan audit.”

Benefit of DOL Oversight

The DOL oversight has helped the retirement plan industry to become more efficient over the years.  One area of qualified retirement plans that has benefited is the reduction of the number of prohibited transactions.  Historically plans would employ assets or participation in fractional shares of assets that were illiquid, such as distressed debt or private equity – described as Level 3 assets, with no easily established value.  Level 1 assets are registered securities or registered mutual funds –  described as having an easily determined value.  With extensive DOL oversight and the automation of the audit function, there have been significant reductions in Level 3 assets in qualified plans.

To learn if your plan auditor is a member of the Employee Benefit Plan Audit Quality Center visit this link.

Steff Chalk

Steff Chalk

Executive Director at 401kTV | TRAU | TPSU
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education.Steff also serves as the Executive Director of 401(k)TV and The Plan Sponsor University. Steff is current faculty of The Retirement Adviser University.
Steff Chalk
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