Employee Benefit Plan Audits – Are You Getting a Quality Audit?

bsmsA great article from Jaime Sweeney, Senior Manager, Barfield, Murphy, Shank & Smith, LLC.

 

 

 

The Department of Labor and the Employee Benefits Security Administration recently completed an assessment of the quality of audit work performed by independent public accountants and the overall findings were disappointing.  In May 2015, the DOL released a report titled “Assessing the Quality of Employee Benefit Plan Audits” that found 30% of the audits (nearly 4 out of 10) contained major deficiencies in regards to GAAS requirements.  Those deficiencies could lead to rejection of a Form 5500 filing.

The report makes recommendations, including DOL outreach and enforcement related to audit standards.  As part of this outreach, in November of 2015, the DOL distributed letters and information to plan administrators of “funded” ERISA employee benefit plans providing tips for selecting and working with a qualified CPA firm auditor who has the expertise.  Plan administrators are held responsible as fiduciaries of the plan, and can be held personally liable if they are not making reasonable choices with regard to their plan.

The letter explains that a quality audit can help protect plan assets and make sure that the plan is compliant with applicable law.  The letter specifically emphasizes that plan administrators should be careful when they select and retain an auditor.

While many accounting firms are choosing not to continue offering employee benefit plan audits, we at Barfield, Murphy, Shank & Smith, LLC assure you that we are distinctly qualified for this work and will continue to offer this service.

According to the DOL, you should consider the following factors when selecting a CPA firm:

  • The number of employee benefit plans the CPA audits each year, including the types of plans
    • Having worked extensively with retirement plans for over two decades, BMSS is known for having one of the premier auditing practices in Alabama. BMSS audited in excess of 30 plans in 2015, including defined contribution and defined benefit plans.  Our staff has a great deal of experience understanding the nuances of these audits.
  • The extent of specific annual training the CPA received in auditing plans
    • Employee benefit plan audits have unique audit and reporting requirements and are different from other financial audits. At BMSS, all of our employee benefit plan professionals receive annual Continuing Professional Education specific to Employee Benefit Audits.
    • Barfield, Murphy, Shank & Smith, LLC is a member of the American Institute of Certified Public Accounts EBPAQC (Employee Benefit Plan Audit Quality Center), a group created to improve quality of benefit plan audits with news alerts, training, webinars, audit quality center and other resources.
  • The status of the CPA’s license with the applicable state board of accountancy
    • Our CPAs are actively licensed by the Alabama State Board of Accountancy.
  • Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the American Institute of CPAs (AICPA) for investigation
    • We are proud to say that BMSS has not been subject to any DOL findings or referrals. We have not been referred to a state board nor the AICPA for investigation.
  • Whether or not your CPA’s employee benefit plan audit work has recently been reviewed by another CPA (this is called a “Peer Review”) and, if so, whether such review resulted in negative findings
    • BMSS participates in the AICPA Peer Review Program and has passed every peer review. Our last peer review was dated November 6, 2014

If you have any questions or concerns regarding your employee benefit plan audit or if you would simply like more information about receiving a quality audit, please contact one of the EBP Audit professionals Barfield, Murphy, Shank & Smith LLC at (205) 982-5500.

Written by Jaime Sweeney, Senior Manager, Barfield, Murphy, Shank & Smith, LLC

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IRS: Skip Optional Compliance Questions on the 5500, 5500-SF for 2015

IRS: Skip Optional Compliance Questions on the 5500, 5500-SF for 2015

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For 2015, plan sponsors should skip the compliance questions that were just added to the Forms 5500 and 5500-SF, and to Schedules H, I and R for the 2015 plan year. Revised versions of the 2015 instructions for both forms contain the new information regarding the optional questions.

The Department of Labor (DOL) announced this change in a Feb. 16 message to software developers for EFAST-2, the electronic system by which Forms 5500 are submitted. While the DOL has not yet posted these revised versions on the website of the DOL’s Employee Benefits Security Administration (EBSA), the agency says that it plans to do so.

The revised instructions read as follows:

Form 5500

IRS Compliance Questions. New Lines 4o, 4p 6c, and 6d were added to Schedules H and I. The IRS has decided not to require plan sponsors to complete these questions for the 2015 plan year and plan sponsors should skip these questions when completing the form.

New Part VII (IRS Compliance Questions) was added to Schedule R for purposes of satisfying the reporting requirements of section 6058 of the Code. The IRS has decided not to require plan sponsors to complete these questions for the 2015 plan year and plan sponsors should skip these questions when completing the form.

Form 5500-SF

IRS Compliance Questions. New Lines 10j, 14c, 14d, and new Part IX (IRS Compliance Questions) were added to this Form for purposes of satisfying the reporting requirements of section 6058 of the Code. The IRS has decided not to require plan sponsors to complete this question for the 2015 plan year and plan sponsors should skip this question when completing the form.

The IRS added questions to the Form 5500 and its schedules relating solely to IRS compliance issues because the IRS now requires that certain filers submit the Form 5500 Series electronically. It had said that answering the IRS compliance questions it added to the form was optional for the 2015 plan year.

Jamie Kertis, AIF®, QKAjamie kertis headshot
Retirement Plan Specialist
Grinkmeyer Leonard Financial
1950 Stonegate Drive / Suite 275 /Birmingham, AL 35242
Office: 205.970.9088 / Toll-Free: 866.695.5162
www.grinkmeyerleonard.com

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