Atlanta, Georgia (November, 2015) – The U.S. Labor Department’s Employee Benefits Security Administration (“EBSA”) recently published the results of its study on the quality of employee benefit plan audits. While EBSA’s review found that 61% of audits fully complied with professional auditing standards, 39% of audits contained major deficiencies. As a result, plan administrators received communication from the U.S. Department of Labor (“DOL”) over the past week regarding the importance of selecting and monitoring Plan auditors. Reviewing an auditor’s qualifications is a critical step in selecting a plan auditor. The DOL holds plan administrators responsible for selecting a qualified auditor as part of their fiduciary responsibilities in overseeing the plan. As a result of the audit quality issues the DOL studies have shown, EBSA has implemented various enforcement strategies and penalties assessed to the Plan Administrator can be substantial. The DOL has the right to reject plan filings and assess penalties of up to $1,100 per day, without limit, on plan administrators for deficient filings.
A financial statement audit of an employee benefit plan is an important accountability tool because it provides an independent, third-party report to participants, plan management, and the Department of Labor (“DOL”). Reviewing an auditor’s qualifications is a critical step in selecting a plan auditor and the DOL has provided five (5) primary considerations that plan administrators should consider in selecting an auditor. We have included the DOL’s five (5) primary considerations below along with information about Moore Colson’s qualifications with respect to each consideration:
- The number of employee benefit plans the CPA firm audits each year, including the types of plans.
Moore Colson audits over 50 employee benefit plans each year. These audits cover a wide range of plan types including defined contribution plans, defined benefit plans, and health and welfare plans. In contrast, 95% of all CPA firms that perform employee benefit plan audits audit less than 25 plans on an annual basis. Firms that audited 24 or fewer plans per year had deficiency rates over 50% in EBSA’s quality study.
- The extent of specific annual training the CPA received in auditing employee benefit plans.
Each year, members of Moore Colson’s employee benefit plan audit leadership team attend the American Institute of CPA’s (“AICPA”) Employee Benefit Plan Conference which provides three days of extensive training related to current topics for these audits. In addition, an annual Moore Colson audit department training is conducted for managers, senior associates, and associates related specifically to the audit of employee benefit plans. Finally, Moore Colson conducts other trainings throughout the year as new standards are issued and utilizes various webinar resources provided by the AICPA’s Employee Benefit Plan Audit Quality Center (“EBPAQC”).
- The status of the CPA’s license with the applicable state board of accountancy.
Moore Colson holds valid, up-to-date licenses to perform auditing services with the applicable state boards of accountancy.
- 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.
While our audits have been subject to routine reviews by the Department of Labor and the Internal Revenue Service, we are pleased to report that these reviews have yielded no findings or referrals.
- 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.
Our firm is subject to a Peer Review every three years and several of our employee benefit plan audits are reviewed during this process. Moore Colson has received the highest rating possible, referred to as “Pass”, in each of its peer reviews since the firm’s inception.
Finally, Moore Colson is a proud member of the AICPA’s Employee Benefit Plan Audit Quality Center (“EBPAQC”). The AICPA EBPAQC is a firm-based, volunteer membership center created with the goal of promoting quality employee benefit plan audits. Center members demonstrate their commitment to ERISA audit quality by joining and agreeing to adhere to the Center’s membership requirements regarding policies, procedures, and training. EBSA’s audit quality study noted that members of the Center tended to produce audits that have fewer audit deficiencies.
Moore Colson welcomes the opportunity to assist you as you navigate through the numerous compliance requirements related to your employee benefit plan. Please feel free to contact a member of our employee benefit plan audit team if you have any questions or if we can help you in any way.
Moore Colson Employee Benefit Plan Audit Team Leaders
Chris Arnone, Partner – [email protected]
Brian Renshaw, Partner – [email protected]
Candace Jackson, Senior Manager – [email protected]