Retirement plans are notoriously complex for plan sponsors to manage. While offering a 401(k) or similar plan is a smart way to attract and retain talent, these plans also have strict requirements to protect plan participants, including annual benefit plan audits. However, with trusted retirement plan audit services, you can easily face the challenges of audits and avoid costly penalties, operational missteps, and fiduciary liability.
What are the benefits that retirement plan auditors bring to your organization? Let’s explore how these specialists can help ensure a stress-free audit engagement.
The Hidden Risks in Retirement Plan Oversight
Retirement plans fall under the oversight of the Department of Labor (DOL) and are subject to ERISA (Employee Retirement Income Security Act) requirements. Common employee benefit plan audit compliance risks include:
- Late or inaccurate remittance of participant contributions
- Misapplication of eligibility and vesting rules
- Incorrect use of compensation definitions
- Errors in participant loan or hardship withdrawal processing
“These plans are filled with rules and deadlines that many businesses aren’t fully prepared to manage,” says Bennie Lewis, CPA, Partner at Assurance Dimensions. “Key risks include timeliness of contributions, eligibility enforcement, and correct application of plan terms. All of which must be documented and auditable.”
Retirement Plan Audit Services Reduce Risk and Add Oversight
According to the Department of Labor (DOL), retirement plan audits are required for plans with 100 or more eligible participants’ balances at the beginning of the plan year. These audits evaluate the plan’s financial reporting, internal controls, and compliance with ERISA regulations. But the benefit extends beyond compliance.
“Understanding the definition of eligible compensation and calculating vesting correctly are areas where we consistently help clients,” notes Scott Mattson, CPA, Partner at Assurance Dimensions, LLC. “Our role is to help catch the small things before they become big problems.”
In the 2023 DOL Employee Benefits Security Administration (EBSA) study, 70 percent of audits were found to fully comply with standards or have only minor deficiencies. However, the report also made it clear that audit quality is closely tied to the number of benefit plan audits a firm performs annually. For instance, 70 percent of audits by CPAs performing just one or two audits a year had deficiencies, compared to only 19 percent among firms conducting 100 or more audits annually.
The Importance of Experience and Memberships
The DOL study further underscored that audit firms with more experience in benefit plan audits consistently deliver higher quality results. However, it also showcased the strong link between firm specialization and audit quality, highlighting the value of EBPAQC membership.
Firms performing the fewest audits, which had the highest deficiency rates, were more often non-members of the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC). This correlation highlights the complexity of benefit and 401k plan audits and underscores why sponsors require specialized retirement plan audit services, rather than just general audit experience.
Why These Benefit Plan Audits Matter for Plan Sponsors
In addition to satisfying legal requirements, retirement plan audit services offer these protections for plan sponsors:
- Assurance that plan operations match plan documents
- Verification of eligibility, contributions, and distributions
- Documentation of fiduciary oversight and internal controls
- Identification of trends or recurring operational issues
A high-quality audit can provide early warnings that prevent regulatory trouble and build trust with employees, boards, and investors.
Final Thoughts
Choosing the right firm for your retirement plan audit matters. Assurance Dimensions brings deep experience and reliability to every retirement plan audit. Our firm completes 100’s of plan audits each year. As a member of the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC), the firm demonstrates an ongoing commitment to industry best practices and continuing education. We have been subject to multiple random DOL audits and received clean reports. It’s through this record of high-quality benefit plan audit services that offer plan sponsors the confidence that their audits will be conducted accurately, efficiently, and in full compliance with DOL and ERISA standards.
Contact us today to learn more about our audit and assurance services.
