Your retirement plans management team, the Administrator and Fiduciaries, are in charge of the establishment and maintenance of the plans internal controls. The plan Management team is also responsible for the presentation of available net assets for benefits as well as the disclosure of the plan’s financial statements.
Management is also accountable for the implementation of effective internal control to make certain that a plan’s investments reported in financial statements are in amounts that are in agreement with the plans stated professional and accounting policies.
401(k) PLAN INTERNAL CONTROL PROCESS
The internal control process should include a sufficient understanding of; the strategy, the plan investments, and the methods used by fund managers. A lack of internal controls can make it difficult for plan administrators to guarantee complete and accurate plan information. This includes reliable financial statements and the adherence to plan regulations, all of which can have an effect on participant account balances.
Internal accounting reconciliation by plan administrators should be done regularly as well as data and accounting information reported by outside service providers. This ensures that plan assets are all accounted for and any errors are found and corrected in a timely manner.
Not preforming intermittent reconciliations may result in fraudulent activity, concealed errors, and uncashed benefit checks.
401(k) PLAN CONTROL OBJECTIVES
Control objectives for the plans reporting and financial reconciliation by the plan administrators should cover the following areas.
- Guarantee the valuation correlated to plan investments are measured at fair value.
- Guarantee the accuracy of prior and current period reporting is adjusted for the market and any plan transaction.
- Guarantee the accuracy of reporting hard value assets.
- Guarantee the accuracy of reporting of participant benefit statements.
- Guarantee the plan assets are properly bonded.
- Guarantee that, in accordance with applicable agreements, policies, and/or plan documents the accounting and assessment of administrative expenses are allocated correctly.
- Confirmation that investment expenses and income are recorded at the appropriate amount as well as in a timely manner.
- Guarantee that all benefit payments are properly recorded and cash disbursement records are reconciled.
- Internal plan participant records are compared to the totals from the trust reports on a regular basis.
- The review to insure that expenses and investment incomes are recorded correctly and in a timely manner.
- Review plan participant deferral amount and compare them to recorded totals.
- Review the required annual filings and reporting for timeliness and accuracy.
- Review all financial reports and filings periodically.
Retirement plans can be very complex. Anders specializes in retirement plan audits. If you would like to discuss our audit process in more detail or need an audit request a free consult below. We can help you navigate the world of 401(k) audits proficiently. We also offer off-site assistance and flat-fee pricing so there are no surprises when the job is complete. For assistance, contact the team at (314)-886-7913 to talk about your 401(k) audit needs.All Insights