DOL Warns Plan Administrators about the Importance of Audit Quality and Hiring an Experienced Auditor
The Department of Labor’s Office of Chief Accountant recently emailed all plan administrators of plans required to have an annual financial statement audit alerting them of the importance of obtaining a quality audit from a qualified and experienced CPA firm.
The DOL letter explains that selecting a qualified CPA who has the expertise to perform an audit in accordance with professional auditing standards is a critical responsibility in safeguarding the plan’s assets and ensuring compliance with ERISA’s reporting and fiduciary requirements. The DOL letter states that employee benefit plan audits have unique audit and reporting requirements and are different from other financial audits, and that substandard audit work can be costly to plan administrators and sponsors. The DOL letter also refers to the recent DOL audit quality study which found deficiencies in employee benefit plan audits (see the study at www.dol.gov/ebsa.
The DOL letter urges plan administrators to exercise care in selecting a CPA who possesses the requisite knowledge of plan audit requirements and expertise to perform the audit in accordance with professional auditing standards, and to consider the following factors in ascertaining the qualifications of a CPA firm to perform their plan’s audit:
- The number of employee benefit plans the CPA audits each year, including the types of plans;
- The extent of specific annual training the CPA received in auditing plans;
- The status of the CPA’s license with the applicable state board of accountancy;
- Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to the state board of accountancy or American Institute of CPAs for investigation;
- Whether the 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.
The DOL refers plan administrators to its pamphlet Selecting an Auditor for Your Employee Benefit Plan for additional tips for monitoring the auditor’s work. The DOL has also created an email address (PlanForAuditQuality@dol.gov) for plan administrators to submit questions.
Click here to view the DOL letter to plan administrators on the importance of obtaining a quality audit from a qualified and experienced CPA firm.
You may wish to contact your plan clients to discuss the DOL letter, and be prepared to discuss your firm’s qualifications and approach to ensuring quality in your employee benefit plan audits.
-excerpted from an AICPA Employee Benefit Plan Audit Quality Center alert