Employee benefit plans are very different from other types of financial statement audits. These audits are governed by a myriad of fast-changing regulations issued by the IRS, DOL, ERISA, and the Social Security Administration. In addition, all audits must comply with the rules of the Financial Accounting Standards Board (FASB) and AICPA. This type of knowledge is hard to come by. We have years of experience auditing all types of plans. As a result, we perform a quality, efficient audit.
In addition to year-round experience we receive auditing benefit plans, we conduct CPE training annually directly related to employee benefit plans.
The U.S. Department of Labor’s Employee Benefits Security Administration (http://www.dol.gov/ebsa/publications/selectinganauditor.html) stresses the importance of having auditors with experience with benefit plans.
Should a plan auditor have experience in auditing employee benefit plans?
One of the most common reasons for deficient accountants’ reports is the failure of the auditor to perform tests in areas unique to employee benefit plan audits. The more training and experience that an auditor has with employee benefit plan audits, the more familiar the auditor will be with benefit plan practices and operations, as well as the special auditing standards and rules that apply to such plans.
Expertise in employee benefit plans is important, not only to protect the plan’s assets but also to protect your company from potential penalties that result from deficient audit reports. The AICPA’s Employee Benefit Plan Audit Quality Center states the following with respect to the importance of a quality plan audit
The Importance of a Quality Plan Audit
A quality audit will help protect the assets and the financial integrity of your employee benefit plan and ensure that the necessary funds will be available to pay retirement, health, and other promised benefits to your employees. The higher the quality of a plan’s financial statement audit, the more reliable the information used to manage and administer the plan. A quality audit also will help you carry out your legal responsibility to file a complete and accurate annual return/report for your plan each year. As such, selection of an experienced and reliable auditor is very important.
ERISA holds plan administrators responsible for ensuring that plan financial statements are properly audited in accordance with generally accepted auditing standards (GAAS). There is a significant amount of risk to plan sponsors associated with the audits of their ERISA plans. Recent DOL studies of audit quality have identified significant deficiencies in plan audits. Accordingly, the DOL has dramatically increased and revised its enforcement strategies with respect to audit deficiencies. The penalties for such audit failures can be substantial. The DOL can assess penalties on plan sponsors of up to $1,100 a day (capped at $50,000) per annual report filing where the required auditor’s report is missing or deficient. Plan sponsors should make the selection of the plan auditor a high priority and exercise due care during every phase of the auditor selection process.
We keep all of our clients up-to-date with regulatory changes throughout the year to ensure that you stay in compliance. And should you need other pension-related services, we have relationships with investment advisors, lawyers, third-party administrators – so you’ll always have the expertise you need.