Department of Labor Issues Guidance on Selecting an Employee Benefit Plan Auditor [Blog Post]
January 12, 2016
The following blog post from the SC&H Group Employee Benefit Plan Audit practice provides insights into new guidance delivered by the Department of Labor (DOL) on how to select the right Employee Benefit Plan auditor.
Federal law requires Employee Benefit Plans with 100 or more participants to have an audit as part of their obligation to file an annual return/report (Form 5500 series).
In order to meet these obligations, the Department of Labor recently issued new guidance on how to best select the right Employee Benefit Plan auditor.
As highlighted by the DOL, selecting the right auditor 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.
Based on the guidance, here are the four key questions to ask an Employee Benefit Plan auditor before selecting them:
- Are They a Licensed or Certified Auditor?
Federal law requires that an auditor engaged for an employee benefit plan audit be licensed or certified as a public accountant by a State regulatory authority.
- Is the Plan Auditor Independent?
Auditors of employee benefit plans should not have any financial interests in the plan or the plan sponsor that would affect their ability to render an objective, unbiased opinion about the financial condition of the plan.
- Is the Auditor Experienced?
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.
- Can You Check References and Licenses?
When engaging an auditor, you may wish to obtain references and discuss the auditor’s work for other employee benefit plan clients. If you have additional questions, you may want to verify with the appropriate State regulatory authority that the provider holds a valid, up-to-date license or certificate to perform auditing services.
The new guidance also offers insights into how to prepare for an audit, what questions to ask an auditor, and what to expect at the end of the process.
It is important to note that Employee Benefit Plan audits can help mitigate potential operational failures, and decrease the likelihood that regulators will scrutinize plan sponsors. These annual compliance reviews – performed independently from the IRS and the Department of Labor – help ensure that sponsors are managing their plans properly.
It goes without saying that choosing the right auditor is critical, which is further reinforced by this new DOL guidance. The key is finding the right Employee Benefit Plan auditor who has the right expertise, and can help guide your organization through this often-complex process.
SC&H Group has a robust Employee Benefit Plan Audit practice that audits over a hundred plans annually ranging in size from 100 to over 200,000 participants. The practice provides plan sponsors with expert EBP audit, audit coordination, and filing services for full compliance and assurance. Our professionals have both EBP auditing and third-party administration experience — bringing a depth and breadth of knowledge to their engagements — as well as dedication to client service that is unparalleled in the industry.
Be sure to download our “Top 10 Issues Affecting Employee Benefit Plans” white paper here.