Posted by Maria T. Hurd, CPA
As published in the CPA Success article titled Employee Benefit Plan Audits Still Don’t Make the Grade, the Department of Labor’s Chief Accountant Ian Dingwall has stated that plan audits continue to show a 30 percent deficiency rate. Specifically, he enumerated problems including lack of documentation, inadequate testing of hard-to-value assets and an uptick in criminal enforcement cases due to lack of checks and balances.
It is important for to utilize an audit firm that takes a risk-based audit approach and addresses all of the deficiencies the DOL encounters by taking into account each specific plan sponsor’s internal control structure. Our employee benefit plan audit procedures at Belfint, Lyons & Shuman are tailored to each plan design and its checks and balances, including whether the service providers can provide an SSAE 16 report regarding the adequacy of the design of internal controls, as well as whether the controls are working. For plans that cannot provide an SSAE 16, (typically plans that contain hard-to-value assets or self-directed brokerage accounts that are not held by a common custodian) our employee benefit audit group includes an investment expert with over 10 years of experience in audits of hedge funds and investment companies.
As our January 26, 2012 blog entry titled Who Audits the Auditors shows, DOL agents really do review workpapers, so be thoughtful when selecting your auditor. Auditing retirement plans well requires a major investment in continuing education to ensure that the audit procedures comply with all the industry-specific standards and that the audit team is abreast of the ever-changing regulatory environment. Before selecting a retirement plan auditor, plan fiduciaries should consult the DOL and AICPA websites and use the tools provided to ensure the selection of an auditor with enough expertise in the industry to guarantee a quality audit.