Employee benefit audit program

Depending on your other responsibilities and projects, it may be wise for you to delegate the management of the audit to another team member while you retain decision-making and internal management reporting responsibilities.

Keep in mind that your plan team includes more than just fellow employees who work on the plan; it also includes your ERISA attorney, plan consultant, administrator, investment advisor, and trustee. You may want to consider having your legal counsel or consultant manage the audit for you.

This is particularly useful if your provider is supporting you in most of the advisory roles of the plan.

Schedule a team meeting prior to the on-site visit to review the Information Request Letter, review plan provisions and procedures, and prepare for any questions. The regulators recognize and appreciate it when you ask for a different schedule for good reasons. Auditors are looking for specific information, so provide only what is requested.

During the audit, proactively address any issues of concern raised by the auditor, be available and responsive, and be patient with the process. In addition to the on-site visit, the audit team may take certain documents for further review. The DOL focuses its examinations on prohibited transactions. With most fees now paid by plan participants, the DOL focuses on enforcement of the fundamental fiduciary conduct that:.

While the DOL focuses on participants and fiduciary roles and responsibilities, there is clearly a shared focus with the IRS on compliance i. So is compliance with the regulations that pertain to plan qualification, including nondiscrimination testing and all limits. The IRS also looks at compliance with the plan document, which includes consistency among all your plan documents and plan operation, compliance with constantly changing regulations, and administration of plan eligibility.

More recently, the IRS has become concerned with improper investment valuations in cases where an asset is illiquid or is not readily valued, which can cause an undervalued or overvalued benefit distribution. The IRS will request information on your nondiscrimination and limits testing, including the primary data.

You can expect your recordkeeper to provide the reporting of this testing and the primary data for their review. The following is a list of the 12 most common issues the IRS finds in its audits of retirement plans:. Most auditors we meet are assigned to multiple cases, so while you should be prepared to hurry up for them, you must also be prepared to patiently wait for their responses to you.

Once the audit is completed, the auditor will follow-up with a phone call to verbally convey the audit findings; this phone call is followed by a written audit findings letter. The letter may include disclaimer language that says there may be ERISA violations in certain areas, but no such activity was found during the investigation.

The more common letter these days is a Voluntary Compliance Letter, which documents that certain infractions were found most commonly late deferrals or issues relating to the loan program , and certain corrective action under the Voluntary Fiduciary Compliance Program VCP is required.

When egregious compliance errors are found, the DOL can sue for civil penalties on behalf of plan participants and initiate litigation against fiduciaries for breach of fiduciary responsibilities.

For an IRS audit, the best case is an audit findings letter showing that no further actions are necessary and that the audit file has been closed.

Here, the general principle is to make the plan and its participants whole. This audit advisory assists members in properly applying the risk assessment standards in employee benefit plan audits.

This non-authoritative document was prepared by the EBPAQC to help plan auditors understand cybersecurity risk in employee benefit plans, and to discuss cybersecurity risk, responsibilities, preparedness, and response with plan clients. The Center is a voluntary membership organization for firms that perform or are interested in performing ERISA employee benefit plan audits.

The Center was established to promote the quality of employee benefit plan audits. Visit rsmus. Coronavirus Tax Issues. Resources Risk Bulletin Technology Bulletin. Resources Newsletters. Resources Market Insights Quarterly Newsletter. Business Services Professional Services. Resources Case Studies Events and Webcasts. Automotive Energy.