On today’s podcast, host Tyler Kern introduces us to the world of Employee Benefit Plan (EBP) audits with a look at why they’re necessary, what to expect from the audit and how employers can find the right auditor.
According to guest Aracely Rios, CPA, Partner for Assurance Services at Weaver, the Department of Labor requires audits for all plans with at least 100 eligible participants. This process involves an outside auditor working with a third-party administrator such as a trustee or bank to ensure that the plan is following operational standards.
The audit process is asking two questions, Kerri Franz, CPA, Senior Manager for Assurance Service explained. First, does the plan comply with the plan in terms of eligibility, contributions and distribution loans? Second, is there complete and accurate financial reporting from the third-party administrator?
Audits frequently find operational errors and deficiencies in plans in areas such as untimely contributions, segregation of payroll taxes, compensation definitions, and the policies and processes around submitting participants. These errors are common but are easily remedied and as Kerri Franz says, “the Department of Labor likes to see them fixed.”
To prepare for an audit, employers will need an investment certification from a third-party administrator and an outside auditor. When it comes to finding a quality auditor, Aracely Rios recommends finding a CPA with good peer reviews, a practice dedicated to employee benefit plans, and continuing education to stay up to date with IRS and DOL rules.
Weaver audits more than 350 plans across Texas with plans ranging from one million to fourteen billion dollars and 50,000 employees. More detailed information is available on Weaver’s Employee Benefit Plan Audit Services page.