How to Choose a Quality Benefit Plan Auditor
A quality audit is essential in protecting the assets and financial integrity of your employee benefit plan. Not only will it help ensure that the required funds will be available to pay retirement benefits to your employees, it can help recognize operational and compliance issues, which if not detected, can lead to expensive and time consuming corrections. Additionally, a quality audit will enable your company to meet its fiduciary responsibility and legal requirement to file a comprehensive and accurate Form 5500.
As the plan’s administrator or plan sponsor, you may be faced with penalties if your audit is incomplete, inadequate or untimely, and the selection of an experienced auditor is critical for success. When looking for a quality, independent public accountant to perform an audit of your employee benefit plan, understanding your auditor’s experience and capability to provide a quality audit can be assessed through the following questions:
- What is the experience of the engagement team? The Department of Labor (DOL) determined that experience is an essential factor in finding an audit firm that will conduct a quality audit. Therefore, it is important to work with a plan auditor that has a depth of experience. There are various types of plans, and it is important to make sure that your auditor is well versed in your plan type.
- How are employees trained, especially for benefit plans? In order to remain current in requirements and regulations, it is critical that your auditor participates in ongoing continuing education, specific to employee benefit plans.
- Is the firm a member of the American Institute of Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center (EBPAQC)? The EBPAQC is a national community of CPA firms that demonstrate a commitment to employee benefit plan audit quality. The EBPAQC provides CPAs with additional training, internal controls and quality guidelines to follow.
- Is the auditor independent from your plan? The DOL and AICPA both require auditors to be independent from the plan. Ask to ensure how your auditor confirms independence.
- Are they properly licensed? It is required for all auditors engaged in employee benefit plan audits to be licensed as a public accountant by the appropriate state regulatory authority.
- Does the auditor have evidence of audit quality? Request recent peer review reports and references for audits of other employee benefit plans. Members of the AICPA receive a peer review every three years.
The DOL and the AICPA have both published guides to help plan sponsors select an auditor. The DOL’s, “Selecting an Auditor for Your Employee Benefit Plan” and the AICPA’s, “The Importance of Hiring a Quality Auditor” are both useful tools.
Finding the right plan auditor is an essential part of maintaining your employee benefit plan. For more information about employee benefit plans and how to improve the quality of your audit, please reach out to us at firstname.lastname@example.org.