You may think that the plan audit is completed each year in order to satisfy your fiduciary responsibility to complete the plan’s filing of Form 5500 with the Internal Revenue Service. Although that is one of the reasons, there are other more practical and beneficial reasons that sometimes get overlooked.
The primary objective of a plan’s financial statements is to provide information that is useful in assessing the plan’s present and future ability to pay benefits. In addition, it helps protect the plan’s financial integrity, improves plan operations and helps the plan sponsor carry out its legal responsibility. Financial statement audits provide an independent, third-party opinion to participants, plan management, the Department of Labor and other interested parties, assuring that the plan’s financial statements provide reliable information to assess the plan’s present and future ability to pay benefits.
Recently, the AICPA Employee Benefit Plan Audit Quality Center published a Plan Advisory providing an understanding of and insights into an independent audit of the financial statements of an employee benefit plan. For a copy of the publication, please contact your Schneider Downs representative or send an e-mail to Lannie McCutcheon.
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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.