At the AICPA’s National Employee Benefit Plan Conference in early May, Michael Auerbach, Acting Chief Accountant within the Employee Benefits Security Administration of the Department of Labor (DOL), presented the department’s findings that audit quality remains poor within the Employee Benefit Plan (EBP) area. The department noted an audit deficiency in nearly 40% of the files they reviewed, however this rate drops significantly for firms which audit in excess of 100 plans annually.
The noted deficiency rates mirrored prior years which led to the DOL’s 2015 communication to plan sponsors, stressing the critical importance of selecting a qualified and experienced CPA to perform the employee benefit plan’s audit. Contracting firms to perform audits that ‘dabble’ in this highly regulated area, and may not be as qualified to perform the work, can result in allegations of whether a plan trustee is meeting their fiduciary responsibilities and acting in the best interest of the plan and its participants.
Michael Auerbach reported that, in the last year reviewed by the department, there were 6,294 firms performing benefit plan audits, however only 99 firms audited 100 or more plans. Those 99 firms, which includes Barnes Dennig, collectively perform 45% of all benefit plan audits which comprise 80% of all plan assets subjected to audits. He, and colleague Marcus Aron from the Office of the Chief Accountant, shared the factors that they believe best audit practices have in common which include:
- Commitment to EBP work from the top down
- EBP-specific training and affiliation
- EBP specialists
- Robust internal inspection program
With a practice of over 130 plan audits, and a dedicated benefit plan audit team of 36 individuals, Barnes Dennig has made the commitment to, and invested in, our EBP practice to maintain the highest levels or quality and technical expertise. This is reflected in the impeccable results of our various regulatory inspections of our EBP practice including those performed by the DOL, the Public Company Accounting Oversight Board (PCAOB) and our peer reviews.
If you have questions about the recent DOL audit findings, have a member of the Barnes Dennig team reach out to you here.