A recent study by the United States Department of Labor found that nearly 40% of employee benefit plan audits tested had serious problems.
Plan administrators are responsible for hiring auditors to properly perform benefit plan audits in accordance with standards.
Failure to meet audit quality standards and plan compliance regulations could prove financially harmful for companies and plan participants.
Here are some critical questions you should ask to make sure your company is in the right hands.
Why Do I Need to Hire an Auditor?
The DOL requires benefit plans with generally over 100 participants to engage an independent auditor.
A quality audit will help you protect the assets and financial integrity of your benefit plan and ensure that the appropriate funds will be available for your plan participants.
It also enables you to fulfill your fiduciary responsibility of filing accurate, thorough annual returns and reports each year.
What Should I Look for in Hiring an Auditor?
Experience. The more training and experience an auditor has, the better equipped that auditor is to navigate the ins and outs of benefit plans and the special auditing standards and rules that apply to such plans.
AICPA Employee Benefit Plan Audit Quality Center Membership. Companies should examine firms for a robust number of audits and auditors in their benefit plan practice and for their membership in the American Institute of Certified Public Accountants’ Employee Benefit Plans Audit Quality Center, which brings the benefit of oversight by its National Peer Review Committee.
Independence. Auditors of employee benefit plans should not have any financial interests in either the benefit plan or the plan sponsor; this would impair their independence and could otherwise impact their ability to render objective, unbiased opinions about the financial condition of the benefit plan.
Licensure and Certification. An auditor engaged for a benefit plan audit must be licensed or certified as a public accountant by the applicable state board of accountancy.
Should I Request References and Check Licenses?
Always. When engaging an auditor, obtaining references and discussing the auditor’s work for other benefit plan clients is critical.
If you have additional questions following a reference check, you may also wish to verify with the appropriate state regulatory authority that all licenses and certifications are up to date.
Doing so should give you the answer as to whether you are in the right hands.