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Section 403(b) Retirement Plan Financial Statement Audits: Questions to Expect from Your Plan Auditor

Under U.S. Department of Labor (DOL) regulations, retirement plans sponsored by charitable organizations and schools under Internal Revenue Code section 403(b) and covered under the Employee Retirement Income Security Act of 1974 (ERISA) are subject to the annual reporting and audit requirements of ERISA. ERISA-covered 403(b) plans with 100 or more participants generally are required to file audited financial statements. 403(b) plans with fewer than 100 participants may be eligible to use abbreviated reporting forms without audited financial statements.

To get ready for your audit, review these example questions that plan management may be asked. The plan auditor may also ask plan management other questions that are not on this list.

General Questions

  • Have any plan amendments been adopted or become effective for the year under audit, or after the plan’s year-end?
  • Have there been any changes in plan status (e.g., mergers, spin-offs, partial terminations)?
  • Is there any intention to terminate or change the plan?
  • Has there been a significant adverse change in the sponsor’s financial condition?
  • Has the plan sponsor had any communication from its auditors regarding material weaknesses or significant deficiencies in the sponsor’s internal controls?
  • Have there been any significant changes in the workforce during the year under audit?
  • Have there been any changes in investment policies or practices?
  • Have there been any inquiries from the IRS or the DOL during the current or prior plan years?
  • Have there been any regulatory reviews, enforcement matters, investigations, or litigation?
  • Have any non-exempt transactions (e.g., non-timely remittance of employee contributions) or events or activities that could cause loss of tax-exempt status (e.g., violations of any law or regulation or plan provisions) been identified either during the year under audit or in the past?
  • Is there any pending or threatened litigation against the plan?
  • Have there been any participant complaints?
  • Are there any significant transactions with parties-in-interest?

Review the Complete List

The above questions are just the start. Additional categories of questions you should review are: Plan Reporting and Governance, Service Providers and Controls, and Fraud


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Source: AICPA American Institute of Certified Public Accountants

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Biz Tip Topic Expert: Mike Gustafson, CPA

Mike Gustafson, CPA

Mike is a Principal at SVA Certified Public Accountants and provides assurance, consulting and tax services to family-owned businesses of varying sizes. He focuses on the hospitality, manufacturing, distribution, construction and professional services industries.

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