DOL Letter Addresses Quality of Employee Benefit Plan AuditsDecember 04, 2015
Selecting a qualified auditor for your employee benefit plan is crucial—plan fiduciaries do not want to be caught with sub-par audit work.
The U.S. Department of Labor (DOL) recently sent a letter to all administrators of plans required to have financial statements audited every year, notifying them of the importance of entrusting a qualified and experienced CPA firm for their audit work. The DOL hopes to communicate the importance of hiring a CPA who has expertise in the area of employee benefit plan audits.
Why was the letter sent?
The DOL sent the letter recently because now is the time when many audit contracts are renewed or are out for proposal and a recent study by the DOL found serious problems with nearly 40% of employee benefit plan audits. The DOL letter states that:
- Employee benefit plan audits are different than other financial audits. They have unique audit and reporting requirements which must be considered when selecting an auditor.
- Second-rate audit work may end up being very costly for plan administrators and sponsors. Sub-par audit work puts plan assets at risk and can result in the DOL imposing substantial civil penalties on the plan administrator. Read our blog, “5 Signs Your Employee Benefit Plan Might Need a New Auditor” for information on a recent DOL study that found deficiencies in many employee benefit plan audits.
What are some items to consider when it comes to selecting an auditor?
If you answer yes to any of the following questions, you probably want to reconsider auditors:
- How many plan audits does the CPA firm perform each year?
- Has the CPA been subject to any DOL findings or referrals?
- Has the CPA been investigated by the AICPA or a state board of accountancy?
- Has the CPA’s audit work been reviewed by another CPA in a peer review? Were there any negative discoveries?
- Does the CPA have limited experience auditing your type of employee benefit plans?
- Is the CPA firm a member of the AICPA’s Employee Benefit Plan Audit Quality Center?
Selecting the right auditor is a critical step in the success of your business. Take time to make sure the auditor you’re considering is experienced, compliant with professional auditing standards, and has a clean reputation.
Visit the DOL website for more information on the process of selecting an auditor for your employee benefit plan.
Questions? Contact any member of our Employee Benefit Plan Team.