Enacted by the United States Department of Labor (DOL) in conjunction with the Internal Revenue Service in 1974, the Employee Retirement Income Security Act (ERISA) was put into place to ensure large businesses that administer an employee benefit plan (EBP) for their employees, conform to all applicable laws and regulations. The act directs employers that have 100 or more eligible benefit plan participants to complete an annual independent audit.
An independent audit is typically handled by a certified public accounting (CPA) firm and includes an employee benefit plan review, recommendations, and help with the completion and filing of the government-mandated Form 5500.
What Does an EBP Audit Cover?
An EBP audit requires an examination of the financial statements provided to the DOL, the plan’s management, as well as the plan’s participants. A primary goal of the audit is to confirm the employee benefit plan’s ability to provide current and future benefits to participants.
Plan reporting and audit standards must comply with:
- IRS and DOL regulations
- Federal and state laws
The specific areas an EBP audit should cover, as directed by the American Institute of Certified Public Accountants (AICPA), include:
- Benefit payments
- Employer and employee contributions
- Investments and investment income
- Administrative expenses
- Participant data
- Loans to participants
- Allocation of participants
- Plan obligations and liabilities
Benefits your business derives from an EBP audit include:
- Safeguarding the ability of your plan to provide health and retirement benefits to participants – your valued employees.
- Helping to make your plan more efficient by reviewing the internal controls involved in reporting.
- Identifying potential operational error points and assisting in the completion of Form 5500 legal requirements.
Who Can Help My Business Perform an Employee Benefit Plant Audit?
Our experts at The Whitlock Co. are uniquely qualified to complete your business’ employee benefit plan audit. Whether you’ve just met the audit threshold or you’ve historically completed an audit and need a fresh perspective, give us a call.
