Employee Benefit Plan Audits
These audits are mandated under the Employee Retirement Income Security Act of 1974 (ERISA). The primary objective of an audit is to ensure the retirement plan you offer meets ERISA standards and the specific requirements of your company's 401(k) plan.
Conducting an employee benefit plan audit involves several important steps to ensure compliance, accuracy, and adherence to regulatory requirements. Here are some the key steps:
1. Plan Understanding and Risk Assessment: We start by understanding the specific details of your employee benefit plan, including plan document review and related provisions and subsequent amendments. The enable us to determine the scope and our focus on the key areas.
2. Internal Control Evaluation: We evaluate the internal controls in place to safeguard plan assets and ensure accurate financial reporting. This involves assessing control procedures related to contributions, distributions, participant data, participant loans and investments. The effectiveness of controls is assessed, and any weaknesses or deficiencies are identified and communicated.
3. Testing of Plan Transactions and Account Balances: We select samples of plan transactions and account balances to test for accuracy, completeness, and compliance with plan provisions and regulatory requirements. This includes reviewing participant contributions, benefit payments, investment transactions, and other relevant transactions.
4. Compliance Review: We examine the plan's compliance with applicable laws and regulations, such as the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and other regulatory requirements. We verify adherence to contribution limits, eligibility requirements, vesting rules, nondiscrimination testing, reporting and disclosure obligations.
5. Financial Statement Preparation and Reporting: After completing the necessary audit procedures, we prepare the financial statements and related disclosures for the employee benefit plan. This includes the statement of net assets available for benefits, the statement of changes in net assets available for benefits, and other required disclosures (Schedule H for the Form 5500).
6. Filing of Required Forms and Reports: Depending on the plan type and size, we assist in preparing and filing necessary forms and reports, such as the Form 5500. This filing ensures compliance with regulatory reporting requirements.
It's important to note that the specific steps in an employee benefit plan audit can vary depending on the nature of the plan, regulatory requirements, and our 20+ years of experience and professional judgment will serve you well in this area.