TWEET THIS: For the worst CPA auditors, a whopping 76 percent of their benefit plan audits are deficient according to research conducted by the U.S. Department of Labor. For the best auditors, it’s only 12 percent. A difference of 64 percent.
TWEET THIS: The Employee Retirement Income Security Act of 1974 (ERISA) generally requires employee benefit plans with 100 or more eligible participants to have an independent financial statement audit.
Not all CPAs are created equal. And neither are their benefit plan audits. Some CPA firms are just better than others at auditing benefit plans.
Maybe you had a bad experience with your previous auditor and would like to make a change. Or you’re new at this benefit plan audit thing, having just passed the 100-employee threshold that means you need an audit.
If so, there’s something you should know.
The Critical Difference Between the Best and Worst Auditors
For the worst CPA auditors, a whopping 76 percent of their benefit plan audits are deficient according to research conducted by the U.S. Department of Labor. For the best auditors, it’s only 12 percent. A difference of 64 percent. And a major difference in the time and budget your organization must devote to the audit.
Given the statistics, your choice of auditor is critically important.
It lands on your company as plan sponsor if things go seriously wrong with the audit. You risk sizeable fines and a serious tax liability, along with a disqualified plan, disgruntled employees and even personal fiduciary liabilities for your plan’s trustees.
The alternative? If your plan needs an audit, engage a proven benefit plan auditor with the expertise and proven track record to minimize your risk. An auditor that can provide you with an efficient, cost-effective and minimally disruptive audit.
When Your Benefit Plan Really Needs an Audit
The confusion for most plan sponsors comes from the definition of an eligible participant. In addition to actively participating employees, the term includes retired, deceased or separated employees who still have assets in the plan, plus all eligible employees who have yet to (or elected not to) enroll in the plan.
How to Identify the Best Benefit Plan Auditors
The Department of Labor’s research identified the important attributes of the best CPA auditors for benefit plans:
The best benefit plan auditors are members of the American Institute of CPAs’ Employee Benefit Plan Audit Quality Center [EBPAQC].
The best benefit plan auditors have a focused benefit plan audit practice and have performed a significant number of benefit plan audits.
The best benefit plan auditors provide their professionals with specialized training in auditing employee benefit plans.
Whether you’re considering a change of auditor or you’re evaluating CPA firms to provide you with a first-ever benefit plan audit, make sure you’re working with one of the best.
Still not sure how to choose the best benefit plan auditor?