Now that the corporate audits and tax returns are complete, companies can now begin to look towards the next hurdle. Generally, employee benefit plans with 100 or more participants are required to have an independent audit as part of their obligation to file the annual report (Form 5500). Your annual audit may be an unavoidable cost of doing business, but it does not need to be a cumbersome process.
One of the most important duties of a plan sponsor is to hire a qualified public accountant. Hiring a qualified auditor helps to protect the assets and financial integrity of the plan and ensure that the necessary funds will be available to participants when they retire. A qualified auditor also helps to keep the plan in compliance with a variety of regulations, which can save the company from penalties being assessed by the Department of Labor (DOL) or possible lawsuits by plan participants.
Even though a plan undergoes an audit, the audit may be deficient due to the selection of an inexperienced auditor. The more training and experience that an auditor has with employee benefit plan audits, the more familiar they are with compliance requirements, plan operations, and specialized auditing standards. This is one area where you don’t want to hire the lowest cost bidder.
To ensure you have an experienced auditor, you may want to discuss their work with other employee benefit plan clients. How many other employee benefit plans do they audit? You may also wish to ask the auditor if they are a member of the AICPA’s Employee Benefit Audit Quality Center, which is a national network of CPA firms that demonstrate commitment to employee benefit plan audit quality.
For these reasons, the selection of an experienced and reliable auditor is very important. Anders can help you and your plan administrators comply with key ERISA, DOL and IRS requirements. Our audit experience includes defined benefit, profit sharing, 401(k), ESOP, and health and welfare benefit plans.All Insights