DOL Warnings on EBP Audit Quality
Did you recently receive an email titled, “A Message from the US Dept of Labor – The Importance of a Quality Benefit Plan Audit?” You are not alone. The message was sent from the Office of the Chief Accountant of the Employee Benefits Security Administration (EBSA) to plan filers identified in the EFAST2 database.
In May 2015, the Department of Labor (DOL) completed an assessment of the quality of financial statement audits of employee benefit plans (EBP) issued for the 2011 filing year. The report identified that nearly 40% of the 81,162 EBP audits contained “major deficiencies with respect to one or more relevant GAAS requirements which would lead to rejection of a Form 5500 filing.” That corresponds to $653 billion in plan assets and 22.5 million plan participants and beneficiaries being at risk.
The DOL began its email outreach to plan administrators to educate them on deficiency rates among plan auditors and to provide information on how to select a quality plan auditor, including making inquiries about:
- The number of EBPs the CPA firm audits each year, including types of plans
- The extent of EBP specific training CPA firm professionals receive annually
- The status of the CPA firm’s license with the applicable state board of accountancy
- Whether the CPA firm has been the subject of prior DOL findings or referrals
- Whether the CPA firm’s EBP audit work has recently been peer-reviewed by another CPA firm
As many plan administrators are in the process of renewing audit contracts, this message from the DOL is timely and relevant to assist plan administrators with making informed decisions.
The full DOL report which contains all of the EBSA findings can be found here.
To learn more about Johnson Lambert’s EBP practice and qualifications to audit various types of EBP’s visit our EBP page.