At CBIZ CPAs, our team of auditors, equipped with thorough expertise and comprehensive knowledge, will ensure your audit adheres to all necessary standards, effectively simplifying EBP audit complexities and ensuring smooth compliance with IRS and DOL regulations.
Review employee benefit plan documents and amendments
Review all new plan documents. including any amendments and updated policies adopted during the year, and compare them to required amendments published by IRS to ensure your plan is up to date and compliant with regulations. Numerous legislative changes have been approved in recent years, which will require various plan amendments to be adopted.
Verify service provider compliance
Review service provider agreements closely, verifying all providers have met their contractual duties, provided their audit reporting packages and census questionnaires, and accurately charged fees based on their agreements.
Determine the timing of payroll remittances
Prepare a summary of all contributions and loan repayments withheld from employees’ compensation and paid by the plan sponsor for the year. Then. determine whether any remittances would be considered “‘delinquent” based on DOL guidance, the plan sponsor’s policies and past experience. If any remittances are considered delinquent, correct them fully as soon as possible to reduce the number of years for which those delinquent contributions would need to be reported. This is a very common area of noncompliance
identified in audits and regulatory inspections, and plan sponsors should proactively communicate with their third-party administrator and auditor on this topic.
Evaluate the definition of eligible compensation
Review whether any new compensation types paid during the year were treated in a manner consistent with the definition of eligible compensation under the plan’s provisions. If there were any situations where contributions should have been made and were not withheld from compensation or matched by the plan sponsor. coordinate with your third-party administrator and auditor to ensure any corrections are made appropriately and timely.
Assess benefit payments
Review your agreements with service providers and their annual SOC 1 testing report(s) to ensure the plan sponsor’s duties are being performed. such as reviewing and approving benefit payments from the plan. If former employees do not deposit benefit payment checks, plan sponsors need to ensure their duties are being met under DOL regulations to locate lost participants.
Review fiduciary insurance
Ensure appropriate fiduciary insurance coverage is in place to protect against claims of breach of fiduciary duties.
Evaluate investment policy statement (IPS) compliance
Review the investment policy statement, ensuring all investments comply with IPS guidelines, and verify the appropriateness and performance of each investment option.
Review annual nondiscrimination tests
Many third-party administrators will not begin nondiscrimination testing until they receive a completed census report and questionnaire from the plan sponsor. The plan sponsor should also review the results of nondiscrimination tests like ADP/ACP and top-heavy tests to ensure the plan does not unfairly benefit highly compensated employees.
Conduct an internal audit of participant records
Perform a thorough review of participant records for accuracy in personal data. beneficiary designations and consent forms. focusing on any discrepancies or outdated information. Plan sponsors should focus on new subsidiaries, divisions and other changes in operations. which could typically cause audit issues to arise.
Prepare for the auditor
Organize all necessary documentation and records for the auditor, ensuring transparency and readiness to address any queries for a smooth audit process.
By focusing on these 10 steps, plan sponsors can proactively address potential audit concerns and ensure a smooth year-end audit. Remember, this is not an exhaustive list, and consulting with your benefits advisor or auditor is recommended for a plan-specific approach.
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