Organizations with 401(k) and other benefit plans that require an annual audit will likely receive a letter via email from the Department of Labor (DOL) (see example by clicking here) emphasizing the importance of audit quality and due diligence in selecting your plan auditor.
Unfortunately, the letter may be read to imply the DOL does not think very highly of your plan’s auditor. There’s no need to panic! The letter is a generic form letter that we expect all sponsors of audited benefit plans will receive. The DOL is sending these letters as a result of their ongoing initiative to reinforce the importance of selecting a qualified plan auditor. There’s risk associated with substandard audit work that can jeopardize plan assets and result in penalties to the plan sponsor.
The DOL recently conducted a study of audit quality and found there is a clear link between the number of employee benefit plan audits performed by a CPA firm and the quality of the audit work performed. According to the DOL study, of the 400 audits examined, 146 of those audits contained five or more deficiencies. One hundred forty-four of those audits (99%) were performed by firms that do less than 100 audits annually.
The size of a firm’s benefit plan audit practice is not the only factor that should be considered, but it is an important one. Please click here for a copy of “Selecting your employee benefit plan auditor: What you need to know.”
Each year, Wipfli audits over 700 benefit plans with as few as 100 or as many as 50,000 participants and several billion dollars in assets. Our expertise and service include preparation of Form 5500, 401(k) plans, 403(b) plans, defined benefit plans, and public companies with 11-K filings.
If you have questions regarding the DOL’s focus on benefit plan audit quality or Wipfli’s benefit plan audit qualifications and expertise, please contact Holly Kohl, Sandy Friess, or your Wipfli relationship executive.