As a standard 401(k) plan sponsor, you might think that it is solely the responsibility of your auditor to understand changes that affect the 2022 calendar year. While your auditor should be fully versed in the new Statements on Auditing Standards (SAS), there are many things that you should be aware of as it relates to SAS 136. Keep reading for the top bits of information you need to know as we enter auditing season.
IS YOUR AUDITOR FULLY UP-TO-DATE WITH the NEW REGULATIONS?
Your first and most important task is to sit down with your auditor to ensure they understand SAS as it relates to standard 401(k) plans. Make sure that they have taken the time to review the changes, as their lack of understanding could mean big trouble for you. If your auditor has to stop and learn along the way, there may be additional time and expenses that you weren’t prepared for.
Even more concerning, an auditor that’s not fully versed in the new changes may trigger a significant delay by the Department of Labor, and your 401(k) may be subject to a second audit. Simply asking your auditor how they’ve become familiar with the new guidelines is an easy step you may regret not taking.
YOU ARE REQUIRED TO REVIEW THE 401(k) AUDIT TYPE
When you are the plan sponsor of a standard 401(k), you may be required to have your plan evaluated under a limited or full-scope audit.
While the overall nature of your 401(k) audit may not be any different, what has changed is that it is now your responsibility to confirm which audit style is necessary. Your auditor can help you make this decision.
401(k) PLAN MANAGERS STANDARDS CLEARLY OUTLINE YOUR ADDITIONAL RESPONSIBILITIES
New standards have been written to be clearer than before. Today, standard 401(k) plan managers are explicitly expected to keep documentation, maintain regulatory requirements, and make and distribute plan documents where necessary.
Although none of this is new, it is up to you to understand the needed information and other pertinent requirements. This is another area where diligence is due, and you must discuss these wording changes with your auditor to ensure that you both understand your respective responsibilities.
401(k) PLAN MANAGERS MUST DISCUSS POTENTIAL CONCERNS
More than just knowing what’s expected of you, the new standards require that the plan sponsor (your company) discuss any potential concerns, such as a planned or potential plan termination. Be as upfront with your auditor as possible about these so that there are fewer delays.
NEW TIMING FOR FORM 5500
A standard 401(k) audit requires form 5500 to be completed and reviewed. However, new SAS guidelines assert that this form must be “substantially complete” before your auditor can date an opinion letter. Talk to your auditor, and have a draft ready to ensure a smooth and expedient audit process.
YOUR 401(k)PLAN AUDITOR MUST PROVIDE YOU WITH “REPORTABLE” FINDINGS
Your auditor is going to talk to you about issues anyway. However, the 2022 calendar year changes state that reportable findings are provided to you in writing. To ensure there are no surprises, maintain an open line of communication with your auditor from start to finish.
As the sponsor of a standard 401(k), you may find that there are other changes for 2022 that affect the audit process. Diligence, patience, and communication, along with organized paperwork and preemptive planning, can help you get through the process.
As the plan sponsor, when it’s time to audit your 401(k) plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Anders we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete.
To get started, request a free 401(k) audit consultation below or contact the team at (314)-886-7913 to schedule an appointment.
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