Your 401(k) audit is finished. The Form 5500 is filed. Everyone can finally move on.
But before you do, it’s worth asking one more question: Was the audit experience actually good?
Completing the audit on time is important, but it shouldn’t be the only measure of success. The process should also be organized, predictable and manageable for your internal team. A short post-audit review can help you identify what worked, what didn’t and whether your current audit process is as efficient as it could be. Here are seven questions to consider.
1. Did the Audit Start and Finish When Expected?
A good audit timeline shouldn’t be a mystery.
Think back to when the engagement began. Did you know when requests would arrive, when testing would occur and when the final report was expected?
Some delays are unavoidable, especially when an audit uncovers an issue. But repeated periods of inactivity, last-minute requests or an audit that drifts toward the filing deadline may point to a process problem.
Ask yourself: Did we control the timeline, or did the timeline control us?
2. How Much Time Did Your Internal Team Spend on the Audit?
The audit fee is only one part of the cost. There’s also the time spent by HR, payroll, finance, and other employees gathering documents, answering questions, tracking down records, and responding to repeated requests.
If several people spent weeks chasing information for the auditor, that internal burden should be part of your evaluation. A well-run audit should make it clear what is needed, who needs to provide it and why it is being requested.
3. Were Audit Requests Organized and Easy to Understand?
Consider the quality of the request process itself.
- Did you receive a clear, organized list of required information? Or did requests arrive piecemeal through multiple emails from different members of the audit team?
- Did the auditor clearly explain what was missing?
- Were you asked for information you had already provided?
An audit will always require work from the plan sponsor, but unnecessary back-and-forth can make the process much harder than it needs to be.
4. Did Your Auditor Understand Your Plan and Service Providers?
EBP audits are specialized engagements. Your auditor should understand the structure of your plan and be comfortable working with the reports and documentation produced by your recordkeeper, TPA and other service providers.
That experience can make a significant difference when determining what information is actually needed. Ask youself and your team: Did our auditor know where to find the answer, or were we repeatedly asked to figure it out for them?
5. Were Problems Identified Early or at the Last Minute?
Audit findings aren’t necessarily evidence of a bad audit experience. Identifying problems is part of the auditor’s job. The bigger question is when they were identified and how they were communicated.
Eligibility errors, contribution discrepancies, participant loans, compensation issues, and other exceptions are much easier to address when they surface early. Whereas a finding delivered days before the Form 5500 deadline can create unnecessary pressure for everyone involved.
6. Was the Audit Fee Predictable?
Compare the final cost with what you expected when you signed the engagement letter.
- Were additional charges clearly explained?
- Did the fee increase substantially because of routine questions or requests?
- Did you understand what was—and wasn’t—included in the original price?
Audit pricing should be evaluated alongside service and expertise. The lowest price isn’t necessarily the best value, but neither is an unpredictable bill.
7. Did the Audit Leave You Better Prepared for Next Year?
A strong audit process shouldn’t simply end when the report is issued. You should come away knowing:
- What caused delays this year
- Which documents were difficult to obtain
- Which plan issues require attention
- What can be prepared earlier next year
- Who should own each part of the process
If everyone finishes the audit exhausted but nothing changes, the same problems are likely to return next year.
So, How Does Your 401(k) Audit Compare?
There’s no such thing as an audit with zero work for the plan sponsor. But there is a significant difference between necessary audit work and a process that is unnecessarily difficult, expensive, or time-consuming.
After your next audit, look at the experience as a whole: Timing. Internal workload. Communication. Expertise. Issue resolution. Pricing. Preparation for next year.
If several of those areas fell short, it may be worth finding out how your experience compares with other plans.
Look to PK for a Superior EBP Audit Experience
Not sure whether your current audit process is typical? PriceKubecka’s 401(k) audit experts can review your current audit experience, including timing, internal workload, communication, process, and cost, and help you identify where there may be opportunities to improve.
There’s no obligation to change auditors. The goal is simply to give you a clearer benchmark. CONTACT US to recieve an unbiased evaluation.
Frequently Asked Questions
How do I benchmark my company's 401(k) audit experience?
Benchmark your 401(k) audit by reviewing seven factors: whether it stayed on schedule, how much staff time it took, how organized the requests were, how well the auditor understood your plan and providers, how early issues surfaced, how predictable the final fee was, and how prepared you feel for next year. Review these factors while the audit is fresh so you can document specific examples and compare results year over year.
How much staff time should a 401(k) audit take?
The time your team spends on a 401(k) audit depends on how readily records are available, how many providers are involved, and how many issues need follow-up. Add up the hours HR, payroll, and finance spent gathering records, answering questions, and coordinating with providers. Repeated requests for the same records or long email chains to clarify who owns a task can point to places where the process could improve.
What should a 401(k) audit fee include?
A 401(k) audit proposal should state which plan and year it covers, what work and deliverables are included, and when additional charges may apply. Ask how the firm handles extra work and whether it discusses any added fees before proceeding. To evaluate your last audit, compare the final invoice with the original proposal and identify what drove any difference.
When should a 401(k) auditor flag potential issues?
A 401(k) auditor should communicate potential issues as they surface so the plan sponsor has time to gather records, ask questions, and coordinate with providers. If a potential issue comes up during testing, ask what the auditor found, who needs to respond, and when a response is needed. Use the post-audit review to identify which records or processes your team can address before next year’s audit.
When should a plan sponsor consider switching 401(k) auditors?
Consider switching 401(k) auditors when missed milestones, duplicate requests, unexpected fees, or late communication about issues become recurring problems. Use your audit scorecard to ask prospective firms how they set milestones, coordinate with your recordkeeper and payroll team, flag issues, and handle fee changes. Start the conversation before the next audit cycle so you have time to compare proposals and plan the handoff.
