Avoid Costly Mistakes: Hire the Right Benefit Plan Auditor

Providing competitive employee benefits is essential for attracting and retaining top talent. However, with those benefits come complex benefit plan audits and compliance requirements. Partnering with the right benefit plan auditor ensures your organization meets regulatory standards, avoids costly penalties, and provides employees with the peace of mind they deserve.

Before selecting a benefit plan audit firm, it’s crucial to understand how the wrong choice can lead to costly errors and compliance risks. Let’s discuss a few common mistakes plan sponsors make when partnering with an inexperienced firm. This way, you’ll be informed about choosing the right benefit plan auditor for your 401k audit.

Mistakes to Avoid When Hiring a Benefit Plan Auditor

1. Hiring an Auditor Without EBP Experience

Hiring an auditor without experience in employee benefit plans is not a well-informed decision. You need to work with an auditing professional who understands the Employee Retirement Income Security Act (ERISA). ERISA is a key component of employee benefit plans and sets the standard for plans, funding, vesting, and benefit accrual.

Your benefit auditor should also be well-versed in generally accepted accounting principles (GAAP) and perform employee benefit plans audits regularly. According to the Journal of Accountancy, auditing firms that perform less than six EBP audits a year are more likely to conduct an audit that results in a major deficiency.

Failing to work with an experienced auditor can lead to errors, costing your business fines and penalties.

2. Choosing the Low-Cost Option

While it’s great to find bargains on some things, choosing the lowest price option for your employee benefit plan audit might cost you more.

Although some low-cost auditing options provide accurate services, when you hire the cheapest option, you take the risk of hiring an auditor who rushes through the process. A surface-level review of your plan documents and financial records could lead to errors, deficiencies, or incomplete filings—issues that may require a second audit or result in costly penalties.

Employee benefit plan audits require a deep understanding of ERISA, GAAP, and DOL regulations. A qualified audit firm will take the time to thoroughly assess your plan, ensuring compliance with ERISA audit requirements and accuracy while minimizing risks. Rather than focusing solely on price, consider the value of an experienced auditor—one who helps you stay compliant, avoid penalties, and maintain the integrity of your benefit plan.

3. Failing to Verify Audit Credentials

If your benefit plan auditor does not hold the appropriate credentials, you should not work with them.

An excellent benefit auditor holds an AICPA Employee Benefit Plan Audit Quality Center membership. This membership offers them access to continuing education opportunities, ensuring they stay current on the latest industry news and standards. Your benefit plan auditor should also participate in peer reviews. These reviews help ensure the quality of the audit provided by your chosen firm.

An auditing partner who does not maintain their credentials will likely result in a costly mistake for your company.

4. Not Preparing for the Audit

Although there are several things you can do to ensure you hire the right benefit plan auditor, there are also things you should do to prepare for your audit. Failing to prepare for your audit can result in mistakes, even for the most careful auditing partner.

To prepare for your employee benefit audit, organize your records and comply with reporting requirements. These small efforts help streamline the audit process with the right firm.

Why Choose Assurance Dimensions?

Employee benefit plan audits are a considerable undertaking and require a professional auditing team to ensure you avoid fines and penalties.

When you’re ready to hire a benefit plan auditor, consider Assurance Dimensions. Bennie Lewis, CPA, President, Partner at Assurance Dimensions, said it best: “At Assurance Dimensions, we bring decades of expertise to help companies navigate these complex audits with confidence. Our team understands the challenges businesses face, and we focus on delivering efficient, high-quality audits to our clients.”