Audit Of Employee Benefit Plans – While most people are aware of a typical financial statement audit, they may not know that some organizations that provide employee benefit programs also require an audit of the benefit program’s financial statements. Which companies need this type of audit? Why are these changes important? What is the primary purpose of employee benefit plan financial statements? The answers to these questions are quite clear.
For companies that provide employee benefit plans (EBPs) to more than 100 individuals, the Employee Retirement Insurance Act of 1974 (ERISA) requires an independent third-party audit of the EBP as part of the plan sponsor’s obligation to file Form 5500 with the Department. of Labor (DOL). These types of plans can vary, including: 401(k)s, profit sharing, 403(b)s, stock option plans, retirement plans, health and welfare plans, and many others. According to the American Institute of Certified Public Accountants (AICPA), the primary purpose of a plan’s financial statements is simple: to provide information useful in evaluating the plan’s current and future ability to pay benefits.
Audit Of Employee Benefit Plans
The financial reporting process for these plans may involve several different groups. Accounting, Human Resources, Third Party Administrator (TPA), Investment Trustees and Custodians, Actuary and of course the Independent Auditor. Some of the TPA’s tasks include, but are not limited to, amending and revising plan documents, preparing employer and employee income statements, assisting in the processing of all types of plan distributions, preparing credit documentation for plan members, and testing the plan annually to ensure compliance with all IRS nondiscrimination requirements, as well as the preparation of Form 5500. However, it is especially important to note that the ultimate responsibility for EBP financial reporting rests with the plan administration.
Employee Benefit Plan (ebp) Audits
Auditing financial statements helps protect the integrity of the EBP, which helps beneficiaries determine whether the necessary funds will be available to pay pensions, health care and other promised benefits to participants. However, the scope of these checks may vary depending on the circumstances. For example, a limited scope audit gives the plan administrator the option not to review investment information during the audit (at the plan level only). To permit a limited audit, the investment information must be certified as “complete and accurate” by the trustee or custodian. The limited exemption applies only to investments. However, during a full-scale audit, everything in the plan is subject to testing.
The independent auditor’s responsibility in this type of engagement is to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether due to fraud or error. Absolute certainty cannot be achieved, and even a carefully planned and conducted audit may not reveal material misstatements. With these facts in mind, it is important to keep in mind when selecting an independent auditor whether they have sufficient experience in performing EBP audit tasks, as well as how much training they receive each year related to EBP tasks.
The benefit of an EBP audit is not just about compliance, it is also an investment in the business to protect against any potential fraud or abuse as it protects your assets from internal errors and potential employee fraud. If you are already concerned about your plan’s ERISA and DOL compliance, or would like an outside review of your current procedures, please contact us at .
Is the largest local accounting firm in San Antonio, Texas, with offices in Boerne and New Braunfels. Serving our community since 1991. We are a full service CPA firm providing a wide range of tax, audit, accounting, tax litigation and advisory services with excellent customer service to help our clients achieve their goals. PleaseExperience is the key to high-quality and efficient employee benefit plan (EBP) audits. Our company has created a special team that is engaged in EBP audit. We are members of the AICPA’s Employee Benefit Plan Audit Quality Center (EBPAQC), which requires our team members to complete specific EBP-related CPEs each year. BRC is in the top 5% of CPA firms in the country that provide these professional services (based on the number of plans we serve). Our team’s extensive experience, early planning strategies and ongoing communication play a key role in keeping the company compliant with the law and helping to protect the plan’s financial integrity.
Cost Benefit Plan Audit
At BRC, our employee benefit plan team undergoes extensive annual training on professional standards and regulations, including IRS, Department of Labor (DOL) and ERISA requirements.
We work with a variety of plan administrators, attorneys and investment advisors to leverage our industry knowledge and experience to meet our clients’ needs and comply with complex laws and regulations. We invest all our resources in every case. Many of the solutions we offer include:
BRC has experience with single employer and multiemployer plans, defined contribution plans including: 401(a), 401(k), 403(b), money purchase plans, profit sharing and employee stock ownership plans, and health care and social security.
Employee Benefit Audits In Chicago, Il
The Inflation Reduction Act: Key Changes Highlighted for You and Your… With President Biden’s seal of approval, the Inflation Reduction Act (IRA) was signed into law… Read full article
If you offer a benefits program to your employees, you may want to check the plan. The Employee Retirement Income Security Act of 1974 (ERISA) establishes this requirement. But how do you know when your company needs an overhaul of its employee benefits plan? Mayhew’s experienced plan auditors explain what a plan audit is, how it can add value to your business, and when you need an audit.
An employee benefit plan audit is an audit of the plan’s financial statement. This audit reports on the financial health of the plan and general information about the plan.
A plan audit may also highlight opportunities to improve the plan’s operations, effectiveness, controls, and how well the plan complies with IRS and Department of Labor (DOL) regulations.
Employee Benefit Plan Audit Day 2
Defined contribution plans (including 401(k), 403(b), and employee stock ownership plans), as well as defined benefit pension plans and health plans, are subject to ERISA.
Some plans are exempt from ERISA audit requirements. Exempt plans include government plans, church plans, and plans established and maintained under workers’ compensation, unemployment benefits, or disability insurance laws. Nonresident alien plans and unfunded excess benefit plans also do not require an audit.
Independent public accountants, such as those at Mayhew, are the only professionals qualified to audit employee benefit plans. Once completed, the annual audit is attached to Form 5500 (Annual Report/Employee Benefit Plan).
The deadline for submitting form 5500 is seven months after the end of the plan year. If your plan year ends on December 31, you must file Form 5500 by July 31. If necessary, you can request an extension of 2.5 months, making a new deadline of October 15.
K Plan Audits
Your company’s benefit plan typically requires review if it has more than 100 eligible members. An eligible Pension Plan Participant is an employee of your Company who is eligible to participate in the Plan at the beginning of the Plan Year. This includes individuals who choose to opt out of the plan, as well as terminated or retired employees who still have plan balances. For a social security plan, the number of participants is determined taking into account the number of employees (excluding spouses and dependent family members) who actually participate on the first day of the plan year; qualified employees who have opted out of all social benefits of the plan are not counted.
Your company’s plan falls into one of two categories: large or small. The large plan has more than 100 eligible participants and the small plan has less than 100 eligible participants. Your plan size depends on the number of qualified members at the beginning of the plan year. Smaller plans usually do not require revision.
Once your employee benefits plan is reviewed, it should be reviewed annually. But there are two exceptions to this – the 80-120 year rule and the short plan.
A plan with 80-120 qualified members on the first day of the plan year may file a Form 5500 in the same category (large or small plan) as in the previous year under DOL rules.
Employee Benefit Plan 审计s
Has your company recently implemented or discontinued an employee benefits program? Any employee
Employee welfare benefit plans, employee benefit plan audit guide, employee benefit plan audit requirement, employee benefit plans audit and accounting guide, employee benefit plan audit cpe, employee benefit plans for small business, employee benefit plan audit, employee benefit audit quality center, employee benefit audit, employee benefit plans, types of employee benefit plans, audits of employee benefit plans