The Employee Retirement Income Security Act (ERISA) has been around for over 40 years, but until the recent passing of the Affordable Care Act (ACA), the U.S. Department of Labor (DOL) mainly focused its efforts on retirement plans only. The passing of ACA has created a whole new focus on compliance with rules affecting welfare benefit plans, such as employer-sponsored health, dental, vision, life and disability plans. This new focus has triggered an increase in DOL audits of employee benefit plans (EBPs), which has resulted in some employers being found in non-compliance with ERISA.
Not all CPA firms are created equally. Some alarming numbers:
A study conducted by the DOL in 2014 reported that 39 percent of audits performed in 2011 had major deficiencies with respect to generally accepted auditing standards, with findings severe enough to warrant the rejection of a Form 5500 filing. [i] Substandard audit procedures increase the risk that ERISA noncompliance will go undetected and uncorrected, which can be costly to plan sponsors and administrators. Selecting a CPA firm with the EBP expertise needed to perform a quality plan audit in accordance with professional standards helps to ensure your compliance with ERISA’s reporting and fiduciary requirements.
What triggers DOL audits?
There are many reasons your plan may be selected for audit by the DOL, including participant complaints, questionable answers on your plan’s Form 5500, or just the selection process by the DOL. An organization that is found in noncompliance with ERISA during such a DOL audit will be potentially subject to corrective action and/or stiff financial penalties imposed upon the plan administrator. On top of the potential penalties, there are other potential negative outcomes of not being in compliance, including jeopardizing the plan’s qualification(s) as a tax exempt entity, as well as putting the plan assets, and security of the participants, at risk.
Are EBP audits different from typical financial audits?
Yes, there are audit areas that are unique to employee benefit plans, including contributions, benefit payments, participant data and party-in-interest transactions. Audit procedures related to these areas continue to lead the list of audit deficiencies found in employee benefit plan audits. On November 13, 2015, the Chief Accountant sent a message to EBP Plan Administrators’ titled “Re: Tips for Selecting and Monitoring a Plan Auditor”. Among other things, the letter stresses the responsibilities of a Plan Administrator with respect to the EBP audit and lists the following factors to consider to ascertain the qualifications of a CPA firm to perform your Plan’s audit:
- The number of employee benefit plans the CPA firm audits each year, including the types of plans;
- The extent of specific annual training the CPA firm received in auditing plans;
- The status of the CPA firm’s license with the applicable state board of accountancy;
- Whether the CPA firm 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 (AICPA) for investigation; and
- Whether or not your CPA firm’s employee benefit plan audit work has recently been reviewed by another CPA (this is called a “Peer Review”) and, if so whether such review resulted in negative findings.
Relax. We Got This.
We want to assure you that we are committed to EBP specific training and you can be assured that Gilbert’s experts possess the expertise and qualifications necessary to perform employee benefit plan audits in accordance with ERISA standards. Our team is at the forefront of their field, and we participate in hours of continuing education each year so that our skills stay sharp and we keep you in compliance.
Referencing the Five Factors above, you can Relax with Gilbert as your auditor:
- Gilbert annually audits over 30 employee benefit plans including 401(k) Plans, 403(b) Plans, Defined Benefit Plans, and Health Benefit Plans.
- Gilbert personnel annually attend the AICPA’s National Conference on Employee Benefit Plans; participate in multiple employee benefit plan training webinars throughout the year, and new staff complete AICPA EBP self-study courses.
- Gilbert’s licenses to practice as a firm and individuals are current and clear of any issues.
- Gilbert has never been the subject of any DOL findings or referrals. Likewise, we have never been referred to the California Board of Accountancy or the AICPA for investigation.
- Gilbert undergoes a thorough peer review process every three years which includes our employee benefit plan audit practice. Our results have been impeccable and none of our reviews have ever resulted in any negative findings.
Please give us a call today and eliminate the risks to your organization that come with a substandard EBP audit.