For companies that provide employee benefit plans (EBPs) for more than 100 individuals, the Department of Labor (DOL) requires an EBP audit from an independent party.
Your annual EBP report should be executed by a certified public accounting (CPA) firm, to ensure proper compliance and verify that you are meeting your company’s fiduciary responsibilities.
However, not just any auditor or accounting firm can handle employee benefit plan audits. It takes special training to perform the audit correctly and in accordance with the Internal Revenue Code (IRC) standards.
What is an Employee Benefit Plan Audit?
Essentially, an EBP audit is an opportunity to comb through employee benefit plans and identify areas for improvement in the spending and management of these benefits.
EBP audits typically require a dedicated auditing team with a keen eye for detail, since each aspect of the company’s benefits package will be scrutinized, including
- 401(k)s
- Profit-sharing
- 403(b)s
- Stock option plans (ESOPs)
- Union representation
- Pension plans
- Savings plans
- Health and welfare
- Vacation
- Severance packages
- Many other benefits
Effective EBP Audits
Performing an EBP audit in line with the current Generally Accepted Auditing Standards (GAAS) and the Employee Retirement Income Security Act (ERISA) is no easy feat. In a recent survey of EBP audits by the U.S. Department of Labor, nearly 4 out of every 10 audits contained deficiencies, with thousands of businesses falling out of compliance.
You don’t have to perform inefficient EBP audits, though. If you want your required yearly audit to go smoothly and produce valuable results, there are a few things you should look for when hiring a CPA Firm for this task:
- Membership in the American Institute of Certified Public Accountants’ (AICPA) Employee Benefit Plans Audit Quality Center
- Training and experience in performing EBP audits for companies of your size and industry
- Verified independent and unbiased, with no vested interests in your company or your competitors
- Proper licensing and certification for public accounting
Benefits of Employee Benefit Plan Audits
An EBP audit is legally required by the Department of Labor (DOL) to be performed once a year for companies with more than 100 employees. The penalties for failing to audit, or failing to hire an independent accounting firm to perform an EBP audit, can be serious, so if for no other reason than avoiding punishment, you should plan to carry out this audit.
Additionally, the benefits of an employee benefit plan audit go beyond the mere compliance reasons. It should be looked at as an investment in your business to protect against financial fraud and abuse. It also safeguards your assets from both internal errors and employee deception.
Moreover, with the information gathered from this thorough report, you will be able to identify potential areas to save money and streamline your employee benefits. Having data that is clearly organized and analyzed can help you make better decisions when it comes to employee benefit plans. Your accounting firm should assist you in becoming a better manager of both your human and financial resources.
Instead of seeing the annual EBP audit as a source of stress, you should view it as a valuable opportunity to truly understand the health and well-being of your company. If you are looking for an experienced CPA Firm to head your next employee benefit plan audit, reach out to Rivero, Gordimer & Company today at 813-875-7774. Not only can they help you with EBP audits, but they can also assist with other accounting services, tax services, auditing, and valuation & advisory.
