The first time your 401(k) plan is audited can be difficult, confusing, and time-consuming. However, this quick guide should relieve some of the stress. You may feel like the 401(k) audit is being forced on you, and you’d be right. The Department of Labor (DOL) requires that a plan be audited when it has more than 100 eligible participants on the first day of the plan year. So now that your plan needs an audit, allow me to help prepare you for what’s next.
It is important to find a firm that has experience in auditing benefit plans because there are a lot of areas where 401(k) financial statements differ from the financial statements of a regular business, so you can’t assume every CPA is as qualified as the next. Look for firms that are members of the AICPA’s Employee Benefit Plan Audit Quality Center, which has educational and quality control requirements for firms to maintain membership (the Center actually kicked out 73 firms who weren’t keeping up in 2017).
This is important for any company who has a 401(k). A great way to start is to answer two simple questions:
This can make or break your audit experience. Among the first things your auditor will request are plan-related documents. Below are some of the documents that will be requested:
The auditor will no doubt have more requests, but this should help start the document gathering process in preparation for the audit.
Now that you know a little about what is to come, you should be fairly ready for your 401(k) audit. PriceKubecka offers fast and affordable audits that make your life easier. If you would like a formal quote, or to learn more about our offerings, schedule a consult with a certified CPA!