Of course, any CPA firm can perform an Employee Benefit Plan (EBP) Audit.
But did you know, there are approximately 9,300 CPA firms performing 80,000 employee benefit plan (EBP) audits, covering $5.5 trillion in plan assets?
And did you also know that 6,900 of those firms perform 5 or fewer audits?
And 4,600 firms perform just one or two audits?
The majority of those firms performing fewer than 5 audits annually, also are small firms, with 5 or fewer employees, and while these firms perform such a small percentage of audits, they account for approximately 65% of all deficient audits!
So you can see, who you choose to audit your Employee Benefit Plan certainly makes a difference.
What are Common Audit Deficiencies?
Common deficiencies include the auditor’s failure to perform ANY audit work on significant audit areas; failure to understand requirements, inadequate disclosures, and the list goes on and on.
According to the AICPA, “The penalties for such audit failures can be substantial. In recent years, the DOL Employee Benefits Security Administration (EBSA) has significantly stepped up its enforcement of the audit requirement for employee benefit plans. The DOL has the right to reject plan filings and assess penalties of up to $1,100 per day, without limit, on plan administrators for deficient filings.”
Beyond the possible penalties, if the audit of your plan is found to be deficient, you may have to hire another auditor to re-audit your plan.
How do you determine if your original audit, or re-audit, is being performed according to standards? Where do you turn if you need a proper EBP audit?
The AICPA Employee Benefit Plan Audit Quality Center is a good place to start. Member firms are listed in the directory. Member firms are subject to certain requirements which enhance audit quality.
You can also inquire of your current audit firm as to how many audits they perform? How many are EBP audits? How many years of experience do the partners and staff possess?
These are all valid and important questions. As in any high-end financial service, do not be afraid to ask for references.
Audits of EBPs are a highly specialized segment of the industry and should not be performed by a firm without the proper experience. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Assurance Specialists, or call us at 1-800-239-1474.