Performing audits of employee benefit plans requires expertise not found in many accounting firms.
It’s never too early to start preparing for an audit of your company’s retirement plan. Companies are required to have an audit of their employee retirement plans and have it submitted with the Form 5500 by October 15th, so don’t delay.
Audits of financial statements of employee benefit plans must be performed not only in accordance with professional auditing standards, but in accordance with the Federal guidelines established by the U.S. Department of Labor under ERISA (the Employee Retirement Income Security Act).
Generally, federal law requires employee benefit plans with 100 or more participants as defined by ERISA to have audited financial statements attached to their Form 5500 filings. Smaller plans may also need to have an audit if they do not meet certain conditions exempting them from the audit requirement.
Employers often fail to recognize when they reach an audit threshold, and the consequences of not filing can be severe. Errors commonly detected through audits of financial statements of benefit plans include miscounting “eligible” participants who are “obtaining and maintaining benefits,” differentiating between 100 employees and 100 participants, and watching the “80-120 Participant Rule.”