What to Look For When Selecting an Auditor for Your Employee Benefit Plan
posted Nov 1, 2011 by Anthony Mangiarelli, CPA
A quality audit will help protect the financial integrity of your employee benefit plan and ensure that the necessary funds will be available to pay retirement benefits to your employees. A quality audit will help you carry out your legal responsibility to file a complete and accurate annual return/report for your plan each year. Therefore, the selection of an experienced and reliable auditor is extremely important. You want the confidence that the financial aspects of your plan are in qualified hands. Is your CPA firm claiming to be an expert in employee benefit plans? There are three crucial components that your auditor needs to have in order to deliver the peace of mind that you and your plan participants deserve.
- Commitment to Excellence — Be sure to ask your auditor if they are a member of the AICPA Employee Benefit Plan Audit Quality Center. This membership ensures that auditors are kept abreast of the current audit requirements for employee benefit plans. In addition, Center members are subjected to “peer review” every three years by a qualified independent CPA firm. This peer review ensures compliance with appropriate auditing standards for employee plan benefits.
- Proven Track Record — You should determine if your auditor has been reviewed by the Department of Labor. If so, determine whether any deficiencies noted. Having being selected for review by the DOL is not necessarily a bad sign. In fact, the DOL focuses its attention on firms that perform numerous plan audits as well as on firms that perform very few plan audits. The DOL reviews the procedures and processes of the plan auditor in addition to reviewing the actual audit work performed. Auditors reviewed with no deficiencies by the DOL further supports the position as a leader in the audits of employee benefit plans.
- Experience — One of the most common reasons for deficiencies related to employee benefit plans is the failure of the auditor to perform tests in areas unique to benefit plans. The more training and experience an auditor has with employee benefit plan audits, the more familiar with benefit plan practices the auditor will be. The expertise of your auditor is vital. This expertise is in the best interest of plan participants, plan sponsors and most of all, plan fiduciaries. Ask your auditor (1) how many benefit plan audits they perform annually, (2) whether they have a dedicated employee benefit plan service group, and (3) how much specialized training this group receives annually.
The choice of your plan auditor is in your hands. You want your auditor to have each of these components to give you the confidence that you and your plan participants deserve. Make sure that you put your plan in the hands of experts to give you peace of mind.