If your company offers employees benefit plans, depending on the size of your plan, you’ll likely need to work with a CPA firm to be prepared to meet Form 5500 audit requirements. Form 5500 – Annual Report/Return of Employee Benefit Plan is an annual report companies must submit to federal agencies to prove the company’s 401k financial conditions, eligibility and plan qualifications, and how the plan operates.
Depending on the size of your company and the kind of employee benefit plan offered, complying with Form 5500 audit standards might be required. Let’s look at benefit plan audits and how to hire an experienced CPA auditor to ensure the audit is correct.
Form 5500 Compliance and ERISA Regulations
The Employee Retirement Income Security Act (ERISA) requires companies to file Form 5500 with the Department of Labor (DOL) and the Internal Revenue Service (IRS). Before a company files the form, an audit should be completed to ensure compliance with ERISA reporting and disclosure requirements.
There are several essential parts to auditing the financial statements of the plan that are required to be attached to the Form 5500 when it’s filed. During the audit, an auditor will:
- Check for applicability to ensure the benefit plan meets 401k plan audit requirements
- Ensure the reported accuracy of your company’s benefit plan information
- Create a required report discussing your plan’s fairness and compliance with regulations
- Meet submission deadlines to avoid penalties
Three Important Questions to Consider Before Choosing an Auditor
Most CPA firms can complete a Form 5500 audit. However, before choosing an auditor, there are some questions you should consider. Such as:
- Is the auditor certified? Retirement plan audits require a licensed or certified public accountant to complete the audit. The auditor should have the appropriate credentials granted by the state governing board.
- Is the auditor independent? To ensure fairness and accuracy, an auditor must be completely separate from the company that hired them. The auditor should not have any financial ties or stakeholder interest in the company.
- Does the auditor have experience with retirement plans and meeting Form 5500 audit requirements? These audits can be costly if an auditor does not adhere to submission deadlines. You can save time and money by working with an auditor with experience in retirement plans.
Stay Compliant with Form 5500 Audit Regulations
Hiring an experienced certified public accountant can help ensure your company follows compliance with Form 5500 and government regulations. At Assurance Dimensions, we work with businesses ranging from 100 to over 10,000 employees. As a result, you can confidently rely on our experienced audit team, knowing we complete hundreds of these benefit plan audits annually.
Ready to begin your secure remote benefit plan audit? Contact us today to learn more about our auditing services.