Understanding the New Employee Benefit Plan Audit Requirements
Over recent years, the Department of Labor (DOL) has expressed concerns over the quality of Employee Retirement Income Security Act of 1974 (ERISA) employee benefit plan audits, specifically those being conducted as limited-scope audits. As a result, in December 2021, the American Institute of CPAs introduced an update to the approach used to audit employee benefit plans. Organizations that once qualified for limited-scope audits are now required to choose between a full-scope audit or the newest replacement of limited-scope audits, a Section 103(a)(3)(C) audit, which introduces a new set of reporting requirements and required procedures.
Understanding the Changes
With the significant updates to audit requirements, it’s important for you to understand the recent changes and their responsibilities, as well as the responsibilities of your plan auditors. Doeren Mayhew has outlined the primary changes you can expect to see as you prepare for your next audit.
The Replacement of Limited-Scope Audits
One of the most monumental changes that came with the update involved the replacement of limited-scope audits with the Section 103(a)(3)(C) audit. With this new audit you can expect:
- The audit report will look considerably different with a new format to include certified and non-certified audit areas.
- Performance of limited procedures on investments.
- Auditors to work alongside management to ensure necessary procedures are performed to determine the qualifications of the audit.
Requirements for Plan Administrators
- Provide the auditor with a written acknowledgment that the audit is permissible and the certification meets ERISA requirements.
- Audit engagement letter must include the plan sponsor’s acknowledgment of their responsibility for its administration.
- Provide written representations regarding their responsibilities at the conclusion of the audit.
- Provide auditors with a drafted Form 5500, including related schedules, prior to the final audit report being issued.
Here to Help
Navigating these new audit requirements can be challenging, as it will likely require more preparation time for your organization. Doeren Mayhew’s Employee Benefit Plan Group has over 90 years of experience specializing in the rules and regulations governing retirement plans. Our experts have the knowledge and expertise to collaborate with you to produce the best results while providing insight to ensure your plan is properly managed and meets the new ERISA requirements.