No one likes being audited, but it's really important to your plan. Here are our tips on who to hire to audit your ERISA retirement plan and why. Who needs an audit? Check the DOL's FAQs here.
A quality audit protects the assets and financial integrity of your plan and helps you carry out your legal responsibility to complete an accurate report for your plan each year. It's your last line of defense in your company's checks and balances for spotting fraudulent activity or something terribly wrong in your plan.
If it's not done right, and by competent professionals, you risk being embroiled in legal issues if something comes up down the road with a participant ...or worse... the DOL writing you a nastygram saying your audit is a joke. When it comes to your plan's audit, you want to favor quality waaaay over price.
How much do audits cost? Well, probably anywhere from $6,000 - $15,000 but partly based on however complex your plan is. Yep, it's hefty and this is why we suggest you get your money's worth by hiring the right folks.
Auditors are required to be a CPA. You might want to avoid firms that do not have staff dedicated to ERISA plan audits and who do not subscribe to being part of the AICPA Employee Benefit Plan Audit Quality Center. The center is a national community of CPA firms that requires compliance with rigorous standards and practices specific to employee benefit plan audits, including establishing a program to ensure all ERISA employee benefit plan personnel understand these standards and practices.
From a practical perspective, if the firm doesn't really do this work on a regular basis, then it will eat up the plan sponsor's time (and my time if I'm your Planologist) with questions they shouldn't have to ask. It's also ok to ask whether they use the audit as a training ground for new accountants, and if they do, that means you'll see a new rookie every year and you may have to patiently participate in their training.
In short, you're better off paying for a quality retirement plan audit from auditors who will help you understand best practices for controls, do a swell job mining the data, and spot things to fix rather than paying for a sub-par audit performed by a firm that wants to fill up their summer work schedule!
Want embarrassing audit stories or other questions to ask in your due diligence? Reach out here.