How to Select an Auditor for Your Employee Benefit PlanSeptember 27, 2016
Jessie T. Kanter, CPA
All employee benefit plans (401(k), 403(b), Pension and other retirement and health and welfare plans) categorized as “large” plans for Form 5500 reporting purposes are required to have an annual audit performed by an independent auditor. Not sure if your plan is required to have an audit? See our article on audit requirements here.
Key Attributes of a Plan Auditor
Independence: An auditor is required to be independent in order to render an objective opinion on the plan’s financial statements.
Certified: An auditor must be licensed or certified as a public accountant with a state regulatory authority.
Experience: The DOL cites the most common reason for deficiencies in audits of employee benefit plans is the lack of experience with auditing these plans. Employee benefit plans are unique and auditors performing audits of plans require specialized training and experience in order to conduct a quality audit.
AICPA Employee Benefit Plans Audit Quality Center (EBPAQC): The DOL has conducted studies of audit quality and has found that EBPAQC members have far fewer deficiencies in plan audits than those who are not members. EBPAQC members are required to maintain certain levels of training and perform certain quality control functions within the firm.
Ask the Right Questions
The following are some example questions to assist you in vetting potential auditors for your annual plan audit. They are designed to help you gather information about the experience level and commitment to quality of your prospective auditor.
- Do you have audit personnel dedicated to plan audits?
- How many plan audits does your firm perform?
- Is your firm a member of the EBPAQC?
- What kind of training does your EBP staff obtain?
- How is the engagement team structured?
- How does your staff keep up to date on benefit plan industry developments and how do you communicate pertinent information to your clients?
- Will you provide us a detailed listing of what you will need to review as part of the audit?
- Please explain to us the audit process, including planning, fieldwork and completion.
- (For 403(b) plans) What is your specific experience related to 403(b) plans?
- (For Pension plans) What is your specific experience with defined benefit pension plans?
- Do you have experience in dealing with [insert your third party administrator and custodian]?
Your prospective auditor should be able to provide you information relevant to their experience with employee benefit plans, including their commitment to quality audits and proactiveness related to industry developments.
How BlumShapiro Can Help
Currently serving approximately 280 plans, BlumShapiro has vast experience in understanding the intricacies of your plan and translating that knowledge into an effective audit. Our more than 100 professionals are trained in auditing benefit plans, and experienced in financial reporting, compliance, operations and fiduciary responsibilities. Learn more about our benefit plan audit services >>