Why is the choice of an auditor important?
The Department of Labor has developed the following guide for plan administrators in selecting an auditor:
A quality audit 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. A quality audit also will help you carry out your legal responsibility to file a complete and accurate annual return/report for your plan each year. Because an incomplete, inadequate, or untimely audit report may result in penalties being assessed against you as the plan's administrator, selection of an experienced and reliable auditor is very important.
One of the most common reasons for deficient accountant's report is the failure of the auditor to perform tests in areas unique to employee benefit plan audits. 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.
Accordingly, you should make sure that your auditor considered the following areas:
Questions to Ask your Auditor.....
How many benefit plan audits have you performed? With enough experience under the auditor's belt, you don't have to spend time educating the auditor's staff on the mechanics of ERISA and the buzzwords of the industry.
Are you an ERISA specialist full-time or part-time? Determine if your auditor's staff performs benefit plan audits on a part-time basis or if the benefit plans is the sole specialty of the auditor. ERISA specialists are recognized and valued for their efficiency.
To help CPAs meet the challenges of performing quality audits in this unique and complex area, the AICPA has established the Employee Benefit Plan Audit Quality Center, a firm-based voluntary membership center for firms that audit employee benefit plans. Employee benefit plan audits include pension, health and welfare, and 401(k) plans subject to the Employee Retirement Income Security Act (ERISA) under the regulatory authority of the U.S. Department of Labor (DOL). Be sure to ask you auditor if they are a member. Membership in this center will ensure that your auditor is kept abreast of the current audit requirements for employee benefit plans. Each member is also required to have one of its pension audits subject to "Peer Review" every 3 years by an independent CPA firm who has been authorized to perform such a review. The peer review report is then submitted to the AICPA. The AICPA helps ensure that CPAs are applying required professional auditing standards.
(Peggy S. Edge, CPA, LLC is a voluntary member of the Center and we have met all of the requirements of being a member. We are proud of our membership and our affiliation with AICPA and the Employee Benefit Plan Audit Quality Center. If you are interested in obtaining additional information about the Center or about member requirements, visit www.aicpa.org.)
You want to select an accountant who makes the audit of your employee benefit plan audit go as smoothly as possible.
(Peggy S. Edge, CPA, LLC provides everything you need in top quality employee benefit plan audits. I have the experience, education and the discipline to apply professional auditing standards.)
A quality audit 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. A quality audit also will help you carry out your legal responsibility to file a complete and accurate annual return/report for your plan each year. Because an incomplete, inadequate, or untimely audit report may result in penalties being assessed against you as the plan's administrator, selection of an experienced and reliable auditor is very important.
1. Experience is Key:
One of the most common reasons for deficient accountant's report is the failure of the auditor to perform tests in areas unique to employee benefit plan audits. 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.
Accordingly, you should make sure that your auditor considered the following areas:
- Whether plan assets covered by the audit have been fairly valued;
- Whether plan obligations are properly stated and disclosed;
- Whether contributions to the plan were timely transmitted to the trust;
- Whether plan transactions such as contribution or benefit payments were made in accordance with plan terms;
- If applicable, whether participant accounts are fairly stated;
- Whether issues were identified that may impact the plan's tax status;
- Whether any transactions prohibited under ERISA were properly identified and disclosed.
Questions to Ask your Auditor.....
How many benefit plan audits have you performed? With enough experience under the auditor's belt, you don't have to spend time educating the auditor's staff on the mechanics of ERISA and the buzzwords of the industry.
Are you an ERISA specialist full-time or part-time? Determine if your auditor's staff performs benefit plan audits on a part-time basis or if the benefit plans is the sole specialty of the auditor. ERISA specialists are recognized and valued for their efficiency.
2. AICPA Employee Benefit Audit Quality Center Membership
To help CPAs meet the challenges of performing quality audits in this unique and complex area, the AICPA has established the Employee Benefit Plan Audit Quality Center, a firm-based voluntary membership center for firms that audit employee benefit plans. Employee benefit plan audits include pension, health and welfare, and 401(k) plans subject to the Employee Retirement Income Security Act (ERISA) under the regulatory authority of the U.S. Department of Labor (DOL). Be sure to ask you auditor if they are a member. Membership in this center will ensure that your auditor is kept abreast of the current audit requirements for employee benefit plans. Each member is also required to have one of its pension audits subject to "Peer Review" every 3 years by an independent CPA firm who has been authorized to perform such a review. The peer review report is then submitted to the AICPA. The AICPA helps ensure that CPAs are applying required professional auditing standards.
(Peggy S. Edge, CPA, LLC is a voluntary member of the Center and we have met all of the requirements of being a member. We are proud of our membership and our affiliation with AICPA and the Employee Benefit Plan Audit Quality Center. If you are interested in obtaining additional information about the Center or about member requirements, visit www.aicpa.org.)
3. Conclusion
You want to select an accountant who makes the audit of your employee benefit plan audit go as smoothly as possible.
(Peggy S. Edge, CPA, LLC provides everything you need in top quality employee benefit plan audits. I have the experience, education and the discipline to apply professional auditing standards.)