Do You Understand What an Audit of Your Benefit Plan Covers?

The answer to this question may not be what you expect. So, your plan is over the threshold of greater than 100 participants, which requires the plan to be audited each year under ERISA. You have had your plan audited for a number of years, but do you really understand what the audit is meant to accomplish and what the things it is not meant to accomplish? The following is a brief summary attempting to answer that question.

Many believe that the audit is an extensive review of the operational aspect of the plan, including the adequacy of the administrative and fiduciary governance of the plan. However, an audit performed annually by an independent qualified plan auditor (IQPA) is intended to provide assurance that the plan’s financial statements have been presented in accordance with Generally Accepted Accounting Principles (GAAP). The auditor will be looking at and testing operational aspects of the plan such as eligibility, contributions, vesting and benefit payments to assure proper accounting and reporting.

An audit does not assess the adequacy of plan governance, review of the plan’s investment policy, review participant communications, or address issues of plan effectiveness. These plan matters would require a special review typically performed outside of the scope of the audit of the plan’s financial statements.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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