Jul 26, 2016
Kelly Schwarz CPA
Unless you’ve been living under a rock this past year, there’s no doubt you’ve heard about the results of the United States Department of Labor Employee Benefits Security Administration’s (EBSA) study on the quality of benefit plan audits performed by CPAs. The results that were released in May 2015, were not so flattering.
The study looked at a sample of 400 employee benefit plan audits that accompanied plan filings for the 2011 filing year. This was a statistical sample pulled from the more than 81,000 Form 5500 filings that were made for 2011. The results of their study found that of the sample of 400 audits reviewed, 61 percent of the audits fully complied with professional auditing standards or had minor deficiencies; 39 percent of the audits had one or more major deficiencies with respect to one or more relevant generally accepted auditing standards requirements that would lead to a rejection of the Form 5500 filing; and 17 percent of the audit reports reviewed in the study failed to comply with one or more of ERISA’s reporting and disclosure requirements.
Why am I resurrecting all this bad news a year after it was first brought to light? Mainly to remind all of us, plan auditors and plan sponsors alike, that we owe it to the participants of these plans to ensure that their efforts towards retirement are afforded the proper safeguards that they deserve.
Plan auditors should take advantage of all the tools available to them through the American Institute of Certified Public Accountants (AICPA) and the Department of Labor (DOL) in the form of practice aids, audit guides, training opportunities, technical hotlines and membership in the AICPA’s Employee Benefit Plan Audit Quality Center. The DOL welcomes practitioner inquiry via email at PlanForAuditQuality@dol.gov or by calling (202) 693-8818.
Plan sponsors should take the time to review the qualifications of the CPA firm that they are considering hiring to perform the audit of their plan. Sponsors might want to consider such things as the number of plan audits the firm performs, the status of the firm’s license with the applicable state board of accountancy and the results of the firm’s latest peer review and whether any issues were noted during the peer review. The DOL website also has a pamphlet available on its website as a resource “Selecting an Auditor for Your Employee Benefit Plan” that can be accessed at https://www.dol.gov/ebsa/publications/selectinganauditor.html