As a plan sponsor, ensuring your 401(k) plan is compliant and audit-ready is a key part of your fiduciary responsibility. Before hiring a 401k audit company or 401k auditor, it’s important to understand what to expect from the audit process—and confirm that the firm you choose has deep experience in employee benefit plan audits.
While plenty of auditing firms are equipped to handle audits, not every firm will be the right one for your business. As Bennie Lewis, CPA, President, and Partner at Assurance Dimensions, says, “Selecting the right benefit plan auditor is one of the most important decisions a company can make. An experienced auditor ensures compliance with DOL and ERISA requirements.”
This post covers five of the most important questions you should ask a firm before hiring them as your 401k audit company. With answers to these questions, you can be confident in your choice of auditing partners.
5 Questions to Ask Before Hiring a 401k Audit Company or Firm
Keep these questions in mind as you choose your 401k auditing firm.
Question #1: Does Your Firm Specialize in 401(k) Audits?
Just like restaurants are known for specific cuisines, auditing firms also specialize in certain aspects of assurance, compliance, and regulations. Unfortunately, not every firm can handle 401k audits, as that might not be their specialty.
Auditing professionals qualified to conduct benefit plan audits hold specific skills and knowledge that general CPAs do not possess. Qualified auditors adhere to strict compliance requirements for ERISA (Employee Retirement Income Security Act) and the DOL (Department of Labor). They also understand your fiduciary responsibilities, ensure you comply with the DOL, and are skilled in spotting compliance issues, like late remittance.
Question #2: How Many Benefit Plan Audits Does Your Firm Conduct Annually?
Benefit plan audits are complex and often require significant time to complete. This is why experience matters. An auditing firm that performs multiple 401k audits annually understands the process and is more likely to be on top of compliance rules, especially if there are regulatory changes.
Working with an experienced 401k audit company or firm ensures a smooth, more efficient process for you and your organization.
Question #3: Is Your Firm a Member of the AICPA Employee Benefit Plan Audit Quality Center (EBPAQC)?
If the firm you are considering hiring is not a member of the EBPAQC, you may want to put a pause on hiring them to conduct your 401K audit.
Membership with the AICPA Employee Benefit Plan Audit Quality Center demonstrates a commitment to audit excellence and an adherence to best practices.
What is EBPAQC?
This organization is a voluntary membership organization for firms that perform or are interested in performing ERISA employee benefit plan audits, promoting quality in these audits. The EBPAQC offers peer reviews for 401k plan audits, meaning you and your auditing partner receive peace of mind knowing your audit is completed to the highest accuracy standards.
Question #4: How Will You Communicate and Manage the Audit Process?
One of the more important questions you should ask your audit firm is how it communicates during the audit process. For example:
- Do they offer secure remote auditing services?
- Are they transparent and responsive in their communication?
- Do they offer an easy-to-follow, structured process to ensure a smooth audit?
If the answers to these questions are no, you might reconsider. Clear communication, structured processes, and responsive auditors lead to an efficient, stress-free audit experience.
Question #5: What Will the Audit Cost, and Are There Any Hidden Fees?
The biggest question you may have about 401k audits is, “What is the cost?” Experienced 401k auditors take the guesswork out of the costs of their services. They understand that hidden fees are frustrating and can harm their reputation.
Instead, experienced 401k audit firms, like Assurance Dimensions, provide transparent, upfront pricing. This ensures you can prepare fully for your audit without worrying about expenses.
Why Choose Assurance Dimensions?
Hiring an accounting firm for your benefit plan audits can be challenging, although it doesn’t have to be. Consider their prior experience auditing employee benefit plans, and ensure they are a member of the EBPAQC. Previous experience and membership with EBPAQC help ensure a smooth audit experience.
Bennie Lewis, CPA, said it best about our approach to 401k audits at Assurance Dimensions. He said, “We take a proactive approach to benefit plan audits by working closely with our clients to ensure they’re prepared well before the audit begins. Our team understands the challenges businesses face, and we focus on delivering efficient, high-quality audits to our clients.”
Contact us today to learn more about our accounting, audit and assurance services.
