The Department of Labor and IRS require companies with employee benefit plans of 100 or more participants to file Form 5500, including an audit performed by a third-party CPA firm. Finding a quality CPA to perform your audit is important to oversee the assets and protect the financial integrity of your pension plan. A properly performed audit requires evaluating the strength of the plan’s internal control over financial reporting and identifying control weaknesses. This helps to guarantee that the necessary funds are available to fulfill any obligations you have to your employees, and reduces the risk of penalties. This can also help ensure compliant plan operations and management with minimal disruption to the Plan Sponsor, when conducted by qualified CPA’s experienced in auditing employee benefit plans.
Using a firm knowledgeable about the special auditing standards and rules that apply to employee benefit plans can provide a much more thorough service. Because an employee benefits plan audit is considered to be a fiduciary function, there is a level of protection to the sponsor of the plan when a competent audit is conducted. Every sponsor has potential liability to restore any losses to the plan if basic standards of conduct are not followed. In reviewing the quality of plan audits, the Department of Labor has found that firms with limited employee benefit plan audit experience have a higher rate of deficient professional work. For this reason, the AICPA has created “The Employee Benefit Plan Audit Quality Center” (EBPAQC), which is composed of trusted CPA’s who have proven they care about the quality of their employee benefit plan audits.
There are some important criteria businesses should consider when choosing the right plan auditor. First and foremost, is the auditor’s experience and commitment to continuing professional education. Auditors who have more experience working with employee benefits plans are better at evaluating whether plans have been reported fairly. And, understanding the unique aspects of plan requirements, they will address the timeliness of plan contributions, how plan provisions affect benefit payments, and issues that may affect the plan’s tax status. When seeking out a quality auditor, it’s important to obtain references and make sure that they have the right background to perform employee benefit plan audits.
We know the accounting and tax issues involved in auditing employee benefit plans and we’re members of the EBPAQC. We’ve been conducting these audits for some very large employers for many years, always putting an emphasis on attention to details. Let us take handle your audit, and assist you in the administration of your employee benefit plan, through an audit service that will give you peace of mind.