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Frequently Asked Questions

Read our FAQs to learn how the team at AC CPA, PLLC effectively provide 

audits for ERISA employee benefit plans. 

What is an Employee Benefit Plan Audit?

The principal objective of an employee benefit plan audit is to provide information that is useful in assessing a plan’s present and future ability to pay benefits.

Who needs an Employee Benefit Plan Audit?

Plans with 100 or more participants at the beginning of the plan year are generally required to have a plan audit.

Who are eligible participants?

Eligible participants include all employees who are eligible to contribute to the plan, not just employees that actually contribute or have account balances.

What benefits are there to consulting a specialist for our plan audit instead of an existing tax and/or financial audit CPA?

A specialist provides more depth of knowledge and a streamlined process, saving the client  valuable time and money when compared to large regional and national firms.

A deficiency finding in an audit may result in civil penalties levied on the plan's sponsor. In today's litigious environment, it is more important than ever that the auditors you engage are experts in auditing employee benefit plans.

What is involved in being audited?

An Employee Benefit Plan Audit encompasses a financial statement audit of an employee benefit plan to be filed with the 5500, along with Compliance testing, including:

  • Participant eligibility

  • Timing of contributions to the plan

  • Plan compensation

  • Disclosure of prohibited transactions

  • Other compliance matters applicable to the plan

An auditor’s primary objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Subsequently, the auditor reports on the financial statements in accordance with their findings.  The DOL expects the independent auditor to submit an opinion on the material fairness and accuracy of the DOL-required supplemental schedules attached to the Form 5500.

Testing for reasonable assurance and accuracy is important due to the multiple parties involved in the financial reporting process for an employee benefit plan. Typically, EBP financial reporting requires multiple participants including the plan sponsor’s financial accounting and human resources department, a third-party administrator, investment trustees and custodians, an actuary, ERISA legal counsel, and an independent auditor.

For an employee benefit plan audit, the plan’s financial reporting and audit environment are considerably unique and elevate the complexity of the audit. Among these unique characteristics are the nature of plan operations, the various laws, Department of Labor (DOL) and Internal Revenue Service (IRS) regulations, special reporting, and audit requirements. In addition, other possible complicating components  include plan documents, plan mergers, freezes or terminations, and changes in service organizations.

What is considered a “qualified” auditor?

Qualified auditors participate in the required Peer Review program where another CPA firm performs a review of previously completed audit engagements to test if their practice meets all professional standards. The AICPA also has an Employee Benefit Plans Audit Quality Center in which all members meet specific experience, training, and practice monitoring requirements. The AICPA exam-based certification covering 401(k), 403(b), and ESOP plans known as the Advanced Defined Contribution Plans Audit Certificate can be an indicator of knowledgeable plan auditors. 

Where can I learn More about Retirement Plan Audits?

More information about retirement plan audits can be found in the following document from the US Department of Labor.

Ready to Get Started?

If you are in need of a qualified CPA for your retirement plan audits, contact AC CPA, LLC today! Call our Charlotte office at (704) 920-8045 or request a consultation using our online form.

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