Typically, employee benefit plans with 100 or more participants are required by federal law to have an audit performed as part of their annual Form 5500 series filing with the U.S. Department of Labor (DOL). Over recent years, the DOL and the American Institute of Certified Public Accountants (AICPA) have made various efforts to improve benefit plan audits. That being said, in mid-2015 the DOL reported results on a study of the quality of benefit plan audits. The study revealed increased deficiencies in the audits over the past 10 years. Given the investment made by both the DOL and the AICPA, and these recent study results, we understand the DOL’s increased regulation in this area and what this means for the administrators of these plans.
With their heightened level of interest in the compliance of these audits, both the DOL and the AICPA published several recommendations and outlined a number of factors for benefit plan administrators to consider when selecting their auditors.
The following outlines the DOL’s recommended qualifications of the auditor or audit firm you use for your benefit plan audit. Given our extensive experience conducting plan audits for a variety of plan types — including profit sharing, 401(k), 403(b), traditional pension, cash balance and ESOP plans — you will quickly observe that we meet and often exceed these qualifications.
- DOL Qualification: The number of employee benefit plans the CPA audits each year, including the types of plans.
How Selden Fox Qualifies: We perform more than 30 employee benefit plan audits annually, including defined contribution 401(k) and 403(b) plans and defined benefit pension plans. According to a recent study performed by the Department of Labor, less than 10% of CPA firms evaluated in the study perform 25 or more engagements.
- DOL Qualification: The extent of specific annual training the CPA received in auditing plans.
How Selden Fox Qualifies: We are a member of the American Institute of Certified Public Accountants (AICPA) Employee Benefit Plan Audit Quality Center (EBPACQ). Our officers and managers performing benefit plan audits meet and often exceed the training requirements set forth by the EBPACQ. Our professional staff members involved in benefit plan audits also receive focused benefit plan audit training prior to joining any benefit plan audit engagement team.
- DOL Qualification: The status of the CPA’s license with the applicable state board of accountancy.
How Selden Fox Qualifies: We as a firm, and all of our CPAs, are in good standing with our licenses.
- DOL Qualification: 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 AICPA for investigation.
How Selden Fox Qualifies: We have not been the subject of any prior DOL findings or referrals and have not been referred to a state board of accountancy or the AICPA for investigation.
- DOL Qualification: 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.
How Selden Fox Qualifies: We have participated in the AICPA peer review program since our founding in 1978. The peer review process involves rigorous study by an independent accounting firm of a member firm’s quality control, including the employee benefit plan audit work. Having completed our 12th Peer Review, we received the highest ranking possible — an opinion that we meet all of the quality control and professional standards established by the AICPA.