DOL Sharpens Focus on Employee Benefit Plan Audits
As part of increasing oversight of ERISA plans, the Department of Labor (DOL) has sharpened their focus on monitoring employee benefit plan audit quality along with plan operations. Evaluating the performance of your employee benefit plan auditor has become a critical step in fulfilling your fiduciary duties.
Employee benefit plan audits have unique requirements that are distinct from other financial statement audits. In a recent audit quality study, the DOL found deficiencies in nearly 40% of employee benefit plan audits. Since substandard audit work can be costly, many plan administrators and sponsors may be deciding whether to renew or send their audit engagements out for bid.
The DOL urges plan administrators to exercise care in selecting a CPA firm with the requisite knowledge of plan audit requirements and the expertise to perform the audit in accordance with professional auditing standards. The following factors should be considered:
- The number and type of employee benefit plan audits performed by the CPA firm each year.
- The extent of specific annual training the CPA firm’s professional staff received in auditing plans.
- The status of the CPA’s license with the applicable state board of accountancy.
- Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the American Institute of CPAs for investigation.
- Whether the CPA’s employee benefit plan audit work has recently been reviewed by another CPA firm (“Peer Review”), and if so, whether such review resulted in negative findings.
Contact us with any questions you have about the implications of the new 2015 accounting pronouncements specific to employee benefit plans, concerns about recent notices from the DOL or issues related to your plan’s most recent audit.
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