Employee Benefit Plan Audit FAQ: What do I Need to Know?
Does my plan need an audit?
ERISA generally requires “large plans” to have an audit of the financial statements. The general rule is that plans with 100 or more participants at the beginning of the plan year are considered “large plans,” and plans with fewer than 100 participants are considered “small plans.”
What are the Key Participant Numbers I need to know?
Determining the number of participants is not as simple as it may seem. It is not simply the number that are participating but includes all who are eligible, even if they are not currently participating. There are generally three types of eligible participants: Active, Retired or separated, and Deceased. For definitions of these types, download our benefit plan guide here.
What is the 80-120 Participant Rule?
This rule provides some relief for those plans that frequently fluctuate between slightly more or less than 100 participants from annually switching between categorizing as a “small” plan and a “large” plan each year. It provides that plans with between 80 and 120 participants at the beginning of the current plan year may elect to complete the current year return using the same category that was used in the previous year. Use the table in our benefit plan guide to assist in categorizing your plan.
Why is a Financial Statement Audit is Important?
A financial statement audit assists participants, plan management, and the DOL to assess the plan’s present and future ability to pay benefits. It helps protect the financial integrity of the plan which helps users determine whether the necessary funds will be available to pay promised benefits to participants.
What factors should I consider when selecting an auditor?
Hiring of a plan auditor is considered a fiduciary function. Therefore, there is a potential for liability if a quality audit is not performed. Fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any losses to the plan. In addition, the DOL has the right to reject filings and assess penalties up to $1,100 per day.
Why would I select Barnes Dennig?
On an annual basis, Barnes Dennig audits more than 125 plans for nearly 100 different clients. Our dedicated team of employee benefit plan auditors conducts audits on a regular basis and receives specialized training in benefit plan auditing.
If your company’s plan meets the threshold and a benefit plan audit is needed, contact us to see how we can provide a quality audit that meets the requirements of all regulatory agencies and lets your employees know their assets are secure.