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.
The Department of Labor (DOL) continues to emphasize the importance of audit quality for employee benefit plans. A key piece of audit quality is selecting the appropriate auditor for your plan.
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.
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.
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.