How Do You Select the Right 401k Plan Auditor?

The 401(k) plan has become a staple in corporate benefit packages offered by most Atlanta companies. Plans offer the chance to not only save for retirement but also have the added benefit of being tax free at the same time. While popular with employees, 401(k) and other benefit plans, are subject to several compliance regulations from the Department of Labor (DOL) as well as the IRS. When plans grow, so do the requirements that companies must maintain in order to remain compliant. In fact, these requirements can be so complex that the IRS created the Employee Plans Compliance Resolution System to easily resolve errors. An important milestone to consider is when a plan “graduates” from small to large plan status (plan exceeds 100 active participants) as it triggers an annual audit requirement. While the plan audit may seem just like the financial statement or other audits, there are important differences. This has led many to consider how to find the right benefit plan auditor. To help clients, prospects and others identify a quality plan auditor, Wilson Lewis has provided selection tips below.

Tips for Selecting a Quality Auditor

• Experience – As mentioned above, the DOL has found that experience is an essential factor to finding an audit firm that will conduct a quality audit. For this reason, it’s important to work with a plan auditor that has depth of experience conducting plan audits. Since there are various types of plans such as defined benefits (pension plans), defined contributions (401(k) plans) and audit scope (limited and full scope audits) it’s essential to find a provider that is well versed in your plan type. In addition, find out if the provider is a member of the American Institute of Certified Public Accountants (ACIPA) EBP Audit Quality Control Center (EBPAQC). The EBPAQC provides CPAs with additional training, internal controls and quality guidelines to follow. Search the member directory to determine if potential providers are involved.
• Technical Training – Much like other professional providers such as physicians and attorneys, accountants also receive ongoing professional training. In fact, certified public accountants (CPAs) are required to receive a standard amount of continuing professional education (CPE) hours to maintain their license. When evaluating a provider, be sure to inquire about the type and amount of benefit plan audit training members of their team receive annually. Since training and quality are often connected, it’s important to understand how much training is received annually.
• Audit Focus – The DOL has identified that plan audits are often deficient because of auditor failure to test key areas unique to plan audits. This often includes information related to participant data, participant loans, plan obligations, benefit payments and prohibited transactions. Talk with prospective providers to identify the areas where their audit work will focus. Find out how they will test these essential areas and inquire about other common “trouble spots” that a plan like yours may face. The result will be additional confidence about the provider’s ability to meet your quality needs.
• Audit Process – When evaluating plan auditors, it’s important to understand their process as some audit firms can be very invasive. While it’s necessary to ensure auditors have the needed documentation it’s unnecessary and inconvenient to experience repeated requests for information, poor communication and inability to receive answers in a timely fashion. Find out how the potential auditor will manage communication, audit scheduling and issue resolution.

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Your company’s 401(k), 403(b) or other benefit plan serves the retirement planning needs of current, prior and retired employees. Finding the right plan auditor to ensure proper compliance is an essential part of maintaining the plan. If you have questions about finding a plan auditor or need assistance with your next 401(k) audit, Wilson Lewis can help! For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.