EMPLOYEE BENEFITPLAN AUDIT

BEST PRACTICES

Shannon Black, C.P.A., C.M.A., C.E.B.S.Black & Pinckard, L.L.C.

Joe Lassiter, C.P.A.Pearce, Bevill, Leesburg, Moore, P.C.

QUICK BACKGROUND ON ERISA AUDIT

REQUIREMENTS

Compliance (and more)

Why We Do What We Do?

PLANNING

PLANNING

PLANNING

• Engagement letter (sign it sowe can get started early

• Understand Plan operations and update documentation(change plan provisions, payroll system or service provider, audit scope)

PLANNING

• Key Plan personnel (accounting, HR, payroll, plan administrator. Some do not understand fiduciary duties/responsibilities.)

• Who service providers are and what services they provide (anyone who provides servicesto the Plan)

PLANNING

• Timing of audit fieldwork (the audit takes longer than what you see when we are in the field)

• Obtain census and audit package (what can go wrong here) and select samples.

PLANNING

• SOC1 and investment certification• Discussions with Management• Analytical review (year to year

comparisons)• Financial statement preparation

TESTING (FIELDWORK)

TESTING (FIELDWORK)

• Recalculate gross compensation (why we do that)

• Agree census to payroll and demographics to underlying participant records (DOB, DOH, DOT for vesting and retirement age purposes)

TESTING (FIELDWORK)

• Recalculate EE/ER contributions based on deferral % (obtained from enrollment/change forms or other sources if electronic process)

• Agree EE/ER contribution per census to participant account (CY/PY receivables in and out) –could be posted to wrong participant account

TESTING (FIELDWORK)

• Confirmations (hard copy/email)

• Distribution request forms and evidence of termination (or confirmations) – check with TPA for check copies/forms/1099s if sponsor does not retain

TESTING (FIELDWORK)

• Recalculation of investment income for sample of funds in participant accounts compared to return per Morningstar, Yahoofinance, etc.

• Ascertain that contributions are properly posted to investment selected by participant

TESTING (FIELDWORK)

• Timely submission of contributions to trust (clarity on the rule!!!)

• Loans (if not certified)

• Rollovers (into Plan)

WRAP-UP

WRAP-UP

• Review process• Management

representation letter• Management comments

(suggestions for improvement or errors found)

QUESTIONS

Shannon Black, C.P.A., C.M.A., C.E.B.S.Black & Pinckard, L.L.C.P.O. Box 26384Hoover, AL 35260(205) 824-2251shannon@blackpinckard.com

Joe Lassiter, C.P.A.Pearce, Bevill, Leesburg, Moore, P.C.110 Office Park Drive, Suite 100Birmingham, AL 35223(205) 323-5440joe@pearcebevill.com

Contact Information: