For employers, sponsoring a qualified retirement plan isn’t easy. Staying up to date on the constantly changing guidance and rules issued by federal agencies such as the U.S. Department of Labor (DOL) and IRS is a challenge. An independent retirement plan auditor can help your organization fulfill its compliance requirements and potentially reduce the risks of plan administration.

An audit’s purpose

Qualified retirement plans include traditional pensions, 401(k)s, 403(b)s and some profit-sharing plans. The primary purpose of an audit is to ensure that the plan is operating in compliance with applicable laws as well as the most recent regulations and guidance set forth by the DOL and IRS. An independent audit also reassures stakeholders that your plan’s financial statements offer reliable information.

The Employee Retirement Income Security Act (ERISA) requires annual audits of plans with 100 or more eligible participants at the beginning of the plan year. ERISA also requires plan administrators to follow U.S. Generally Accepted Accounting Principles when creating plan financial statements.

Engaging an auditor

It’s important to choose your auditor carefully. You’ll of course want to consider the prospective auditor’s professional qualifications, experience and licensing. But you must also ensure that the auditor you engage doesn’t have any financial interests in the retirement plan or plan administrator that could bias the audit. For example, the DOL doesn’t view a plan auditor as independent if that person also maintains the plan’s financial records.

The American Institute of Certified Public Accountants offers guidance on creating a request for proposal (RFP) for a qualified plan audit. An effective RFP describes the scope of the engagement — including its objectives, special considerations and expected schedule.

 Risks abound

Unqualified auditors can provide bad information and leave employers vulnerable to unchecked plan failures. This could lead to a DOL investigation and financial penalties. Contact us for more information about properly conducted retirement plan audits.




We highly recommend you confer with your Miller Kaplan advisor to understand your specific situation and how this may impact you.