- Our Team
June 21, 2016
by: John Granger, CPA
A recent study published by the U.S. Labor Department’s Employee Benefits Security Administration (EBSA) found that 39% of the audits reviewed were deficient and failed to comply with professional standards. These results revealed both an alarming issue regarding the quality of employee benefit plan audits. Over the past 10 years, not only has the number of deficient audits increased, but the total number of deficiencies is on the rise as well. Additionally, the review performed by EBSA supports the following conclusion:
A well performed audit and engaging a qualified, experienced auditor will provide vital protection for your employee benefit plan. Federal law requires that an auditor engaged to perform an employee benefit plan audit be licensed or certified as a public accountant by a State regulatory authority (i.e. Accountancy Board of Ohio). Failure of an auditor to meet professional quality standards and plan compliance regulations could prove financially harmful for both a plan’s sponsor and participants, so care must be taken to ensure the plans are being administered correctly.
Remember, benefit plan audits are unique engagements and are not your typical balance sheet audits. It is in your best interest and the interest of your plan’s participants to ensure a quality audit is being performed to help protect the assets and financial integrity of your plan.
Employee Benefit Plan Audit Preparation Tips
Understanding the tests and procedures performed by the auditor per professional auditing standards, will help reduce time spent searching for requested documentation and sending incorrect information. Here is a list of the areas examined during an audit:
*It is a good idea to be sure the administrator at the plan sponsor has online access to their account(s) at third party payroll service providers or maintains a reliable contact. This will expedite the process of acquiring all payroll documents, summaries and reports needed.
*It is a good idea to compile these documents throughout the plan year and be able to provide them upon request.
In addition to being prepared, we recommend that the plan administrator see if the plan’s TPA offers online access for auditors. Providing this type of access will greatly reduce the amount of time spent by the TPA fulfilling the requests from the auditor.
Hobe & Lucas is a member of the AICPA Employee Benefit Plan Audit Quality Center. For any questions you may have regarding employee benefit plan audits, DOL compliance, filing requirements, or audit documentation requests, please feel free to contact us at 216.524.8900 to speak with an experienced employee benefit plan auditor.
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