Defining a successful employee benefit plan audit season

Baker Tilly is pleased to share with you some insights that we give our employee benefit plan audit clients. These insights will help you manage your employee benefit plan audit process and ensure an audit that is efficient, low-stress, and has no surprises.

The top 10 strategies for a successful employee benefit plan audit season

  1. Keep audit files together. Anticipate required documents based on prior year audits and keep them handy. Designate a folder for these items and update it continuously throughout the year.
  2. Check progress. Monitor your audit along the way. Be sure to schedule periodic check-ins with your audit team (internal and external) to keep everyone up to date. If there is a misstep, it is easier to get things back on track when intervening earlier rather than later. Being informed and engaged in your audit helps to mitigate issues before they have permeated the larger process.
  3. Provide accurate and complete documents the first time. Your auditors will require various ledgers and data sets for their audit documentation. Complete and accurate data helps to ensure that audit sampling is correct. Ensure that listings provided for sampling and confirmations have accurate and complete data. Then reconcile listings to appropriate ledgers (e.g., census listing to payroll master control). This eliminates any additional work that may be needed at a later stage in the audit due to incorrect sampling.
  4. Deal with any compliance issues or violations right away. Common compliance issues such as untimely contributions and noncompliance with a plan document can cause audit time to increase and derail a smooth audit plan. Keeping your auditor aware of any potential issues early on helps you and the audit team to respond efficiently and accurately.
  5. Coordinate the audit with all parties. Your audit is a team effort involving not just your internal team and the auditors but also third-party service providers. It is imperative to have everyone on the same page. Inform third-party service providers of your proposed audit dates and requirements ahead of schedule. Ensure they can provide complete audit packages prior to the planning stage. If your team consists of multiple members from various departments (e.g., payroll, HR, finance), make sure they are involved in planning meetings and status updates. Be sure to delegate responsibilities during a planning meeting and follow up to make sure everyone understands their responsibilities. Make sure to set deadlines and expectations for turnaround time on all requests. This helps to keep everyone focused and accountable.
  6. Be an active participant. You are an important part of the audit process. Be sure to manage the audit and those involved in the process (e.g., auditor, TPA, trustee, team members). Communicate expectations and deadlines to all those concerned. Require your auditor to give you regular status updates. In turn, be sure to inform auditors if you will not be able to meet agreed-upon time lines. It is always easy to reschedule ahead of time rather than at the last minute.
  7. Seek confirmations. Prepare and mail confirmations early and do them right the first time. This saves time and effort from gathering additional documentation during final fieldwork. Send confirmations at least four weeks in advance to ensure a good response rate. Increase the response rate of confirmations by making sure to explain to employees what the confirmation is and the importance of responding to them in a timely manner.
  8. Start early to finish early. Don’t procrastinate until the summer to start the audit process. Start planning for the following year as soon as the current audit is completed. Identify which pieces of the audit you can finish early and communicate expectations. Starting early helps particularly if any issues are identified during the audit process, as this helps to provide adequate time to resolve any such matters and still make the filing deadlines.
  9. Get to know your plan. Review your plan document to ensure it is in compliance with regulations. Review the administration of your plan to ensure that the plan document guidelines are being followed. Correct any issues prior to the audit and be sure to communicate any deviations from the plan document to your auditors as soon as possible. Knowing your plan and administrative practices helps minimize plan compliance issues.
  10. Hire professionals! Hire professionals that have a dedicated employee benefit plan practice. How many audits are performed annually? What types of plans (defined contribution, defined benefit, health and welfare plans, employee stock ownership plans) are audited and are they full- or limited-scope audits? Look for professionals with experience and knowledge to ensure you receive quality audit services.
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