If a very small portion of a CPA firm is devoted to Employee Benefit Plan (EBP) audits and training of staff is not specific, the quality of the resulting audit work suffers. Plan Fiduciaries should keep this in mind when hiring a CPA firm to audit their EBPs. A tax accountant, for example, is not going to be as effective at auditing timeliness of employee contributions, vesting percentages and benefit payments, resulting in added risk for plan Fiduciaries.
Even the most diligent plan sponsors do not run retirement plans without operational errors. There are many moving parts and plenty of opportunities for mistakes. The annual audit of the plan by a CPA provides a chance to catch and fix operational errors before a regulator puts the plan under a microscope. Rest assured that DOL and IRS agents are trained to uncover errors in EBP plans and they will find what you have missed. When they do, you’ll face financial consequences and civil penalties.
As a courtesy, and because the DOL knows roughly 4 out of 10 EBP audits are deficient, they provide the following tips for selecting and monitoring plan auditors:
Plan sponsors are on the hook when it comes to selecting a CPA for their EBP audit. My advice – avoid unwanted surprises and hire an expert!
Brian Schiedel is responsible for monitoring daily valuation recordkeeping services, ensuring that transactions meet strict procedural guidelines, and providing compliance and other consulting services for Burke Group’s retirement plan clients. He serves as the direct Relationship Manager for more than 30 retirement plans.
Prior to joining Burke Group, he obtained his bachelor’s degree in management science from the State University of New York at Geneseo. He has also obtained the Qualified 401(k) Administrator (QKA) designation through the American Society of Pension Professionals and Actuaries (ASPPA).