As 401(k) plan audits for 2023 wrap up, plan sponsors and administrators should look ahead to how they will manage your upcoming 2024 plan year audits. Delays in delivering requested documents to your 401(k) auditor can result in late filings while submitting incorrect information can result in a faulty audit. Managing all the information and documentation needed for a 401(k) audit can seem overwhelming, but there are many tools at your disposal to help maintain order and quickly find the specific reports you need.
Director and 401(k) practice leader Kim Moore and audit and assurance manager Karen Hill welcomed Chris Dahl, Vice President of Business Development at AuditMiner, to discuss how using software applications like his company’s can help streamline your audit process.
Document Retention and Tracking in 401(k) Plan Audits
Strong document retention policies can help plan sponsors and administrators keep track of vital records needed to keep your 401(k) audit on track. At any point in the audit process, your auditor may request access to a document that they need for testing or other reason. An inability to find those documents, or submitting incorrect documents, can delay your audit as the mistake is discovered and, hopefully, corrected. Missing the mistake can result in penalties and other costly consequences.
Custom Rules Complicate Payroll Systems and Features
If your company uses a payroll system like ADP, Paycom, Paylocity or the payroll features in QuickBooks, setting up custom rules can create unintended results, especially year-over-year as contributions, limits and even laws change. These incremental changes can wreak havoc on your payroll system, impacting multiple payroll codes with a waterfall effect. On some occasions, a well-meaning individual may temporarily turn off specialty codes, like PTO, holiday and overtime, for benefit plan deferrals for one person, but accidentally change the codes for everyone in the system.
Chaotic situations like the above can be avoided with clear, strong controls over your payroll process including authorization and review of changes made inside your payroll system. In addition, a strong document retention plan can provide documentation to assist in corrections if an error is made but remains undetected. 401(k) plan audits are complex, and the growing list of documents you need to manage may be overwhelming. If you’re at that point, taking advantage of automation technology can help alleviate your burden, making it easier to find the correct information without having to search through piles of the wrong ones first.
What is AuditMiner?
AuditMiner is a tool used by CPA firms to help improve the quality and efficiency of employee benefit plan audit processes. Currently, two automation tools are available: TPA Workpapers and SOC Toolkits. Workpapers processes a 401(k) plan’s audit package into an intuitive set of workpapers for the auditor. This improves efficiency within an audit and ensures the information needed to conduct the required audit testing is readily available to the auditor without a lot of extra effort.
The SOC Toolkits provide a workbook that outlines the information included in the related SOC report. This will include general information about the report, such as:
- the auditor’s name
- date of report
- areas covered
- audit opinion
- information about the auditor
- documentation of the controls included, testing results and user control considerations that need evaluating
This long list of information is provided in an Excel workbook, eliminating the need to manually copy, paste and retype data.
Tools like AuditMiner, among others, work with auditors to ensure a seamless process while also maintaining tight security controls to keep sensitive information secure. The Department of Labor is closely scrutinizing 401(k) plan sponsors and administrators to make sure cybersecurity remains a priority, so finding a platform that is both effective and secure is vital.
If you need an audit for your 401(k) plan, learn more about our 6-phase 401(k) audit process or request a free 401(k) audit consultation below. Watch the 401(k) Audit CPA Success Show: Prevent Delays and Errors in your 401(k) Plan Audit with the Power of Automation Software on YouTube and subscribe on Spotify or Apple Podcasts. Let us know what you think by rating and reviewing.
