Use Qualified Auditors for Your Employee Benefit Plans

Published on: Mar 17, 2017 by Mike Gustafson, CPA

Updated on: March 13, 2024

Employee benefit plans with 100 or more participants must generally provide an audit report when filing IRS Form 5500 each year. Plan administrators have fiduciary responsibilities to hire independent qualified public accountants to perform quality audits.

CHANGES ARE COMING TO YOUR EMPLOYEE BENEFIT PLAN AUDIT

Select a Qualified Auditor

ERISA guidelines require employee benefit plan auditors to be licensed or certified public accountants. They also require auditors to be independent. In other words, they can’t have a financial interest in the plan or the plan sponsor that would bias their opinion about a plan’s financial condition.

But specialization also matters. The more training and experience that an auditor has with plan audits, the more familiar he or she will be with benefit plan practices and operations, as well as the special auditing standards and rules that apply to such plans. Examples of audit areas that are unique to employee benefit plans include contributions, benefit payments, participant data, and party-in-interest and prohibited transactions.

EVALUATING AUDITOR QUALIFICATIONS

Ask Questions

Employee benefit plan audits are a matter of more than just compliance. The auditor’s report highlights any problems unearthed during the audit, which can serve as a springboard for improving plan operations. The conclusion of audit work is a good time to ask such questions as the following:

Have plan assets covered by the audit been fairly valued?
Are plan obligations properly stated and described?
Were contributions to the plan received in a timely manner?
Were benefit payments made in accordance with plan terms?
Did the auditor identify any issues that may impact the plan’s tax status?
Did the auditor identify any transactions that are prohibited under ERISA?

Experienced auditors can also suggest ways to improve your plan’s operations based on their audit findings.

EMPLOYEE BENEFIT PLANS: DO YOU NEED A FORM 5500 AUDIT?

Protect Yourself

Employee benefit plan audits offer critical protection to plan administrators and employees. Your company can’t afford to skimp when it comes to hiring an auditor who is unbiased, experienced and reliable. Contact us for more information on hiring a plan auditor.

A GUIDE TO AUDITS: PREP, PLANNING, AND POST-AUDIT TIPS

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Biz Tip Topic Expert: 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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