401(k) Plan Audit Services

If your company’s 401(k) plan had more than 100 account balances, the Department of Labor (DOL) requires an audit to ensure compliance with specific standards. Going through an audit can be a daunting process, especially if you’re going through the process for the first time. The team members at Mowery & Schoenfeld are experts in auditing standards and can get you through the required annual audit efficiently and on time.

The DOL encourages all employers to choose an audit partner wisely. A recent DOL study found that roughly half of all plan audits are conducted by firms that only perform one or two per year.

Selecting a qualified 401(k) plan auditor who has the expertise to perform an audit in accordance with professional auditing standards, is a critical responsibility in safeguarding your plan’s assets and ensuring your compliance with ERISA’s reporting and fiduciary requirements. Substandard audit work can be costly to plan administrators and sponsors. It both jeopardizes plan assets and can result in significant civil penalties being imposed on the plan administrator by the DOL.

The DOL urges administrators to consider the following factors:

Our four-step approach to completing a 401(k) Plan Audit is designed to make the most efficient use of your time and resources. We are transparent and upfront about our timeline, costs, and expectations and will be available to answer questions or provide guidance throughout the process.

Step 1: Planning 

Gain an understanding of the plan and sponsor
Complete documentation of internal controls
Evaluate SOC 1 reports to determine key complementary user entity controls.

Step 2: Audit Procedures

Complete the testing of plan-level financial information.
Perform testing including eligibility and participant data testing, participant contribution and allocation testing, participant loan testing, distribution testing and compliance, and timeliness of contribution remittances to the plan.

Step 3: Financial Statements & Management Letters

Assist with preparation of the plan’s financial statements
Provide recommendations and process improvements to management.

Step 4: Review Form 5500

Provide feedback on Form 5500 prepared by the plan’s third-party service providers and allow for timely filing with the regulatory agencies.

If your company’s Employee Benefit Plan had more than 100 account balances at the start of calendar year 2023, the Department of Labor (DOL) requires an audit as of December 31, 2023.

What is an employee benefit plan audit?

Employee Benefit Plan Audits help protect the financial integrity of the employee benefit plan – ensuring the necessary funds will be available to pay retirement, health and other promised benefits to participants and their beneficiaries.

During the audit, a team of certified public accountants with specialized training will review and test the plan administration, contributions and timing. We will then assist in the completion of plan financial statements and provide any recommendations. Finally, we will provide feedback on the Form 5500, which will allow for timely filling with the regulatory agencies.

The Department of Labor encourages all employers to choose an audit partner wisely. A recent DOL study found roughly half of all plan audits are conducted by firms that only perform 1 or 2 per year.

Selecting a qualified employee benefit plan auditor who has the expertise to perform an audit in accordance with professional auditing standards, is a critical responsibility in safeguarding your plan’s assets and ensuring your compliance with ERISA’s reporting and fiduciary requirements. Substandard audit work can be costly to plan administrators and sponsors. It both jeopardizes plan assets and can result in significant civil penalties being imposed on the plan administrator by the DOL.

The DOL urges administrators to consider the following factors:

1. The number and type of employee benefit plans the CPA audits each year
Mowery & Schoenfeld, LLC audits a significant number of employee benefit plans annually. We have a dedicated Employee Benefit Plan Audit Lead with a focus on sharing extensive knowledge and experience with our clients. Our services consist of full scope and limited scope audits of defined contribution plans, defined benefit plans, ESOPs, and health and welfare plans.

2. The status of the CPA’s license with the applicable state board of accountancy
Mowery & Schoenfeld’s partners and managers in the Employee Benefit Plan Audit Group are all licensed CPA’s within the State of Illinois.

3. Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the AICPA for investigation.
Mowery & Schoenfeld has not been the subject of any prior DOL findings or referrals, or referred to a state board of accountancy or the AICPA for investigation.

4. The extent of specific annual training the CPA received in auditing plans
Mowery & Schoenfeld has more than 20 audit staff servicing the Employee Benefit Plan Audit practice. Each member is required to complete 40 hours of CPE (Continuing Professional Education) annually, with approximately 10 of those hours dedicated to plan audit quality and process. Additionally, certain members of our Employee Benefit Plan Audit Group also attend the AICPA’s and Illinois CPA Society’s employee benefits conferences annually.

5. Whether or not your CPA’s employee benefit plan audit work has recently been reviewed by another CPA, and whether such review had a positive result
Mowery & Schoenfeld is a member of the AICPA’s Employee Benefit Plan Audit Quality Center, which requires Peer Review procedures every 3 years. Firms can receive a rating of “pass,”“pass with deficiency(ies),” or “fail.” Mowery & Schoenfeld, LLC’s most recent Peer Review Report, dated February 22, 2018, received a rating of “pass.”

Our four-step approach to completing an Employee Benefit Plan Audit is designed to make the most efficient use of your time and resources. We are transparent and upfront in our timeline, costs and expectations; and will be available to answer questions or provide guidance through the process.

Step 1: Planning
Gain understanding of the plan and sponsor
Complete documentation of internal controls
Evaluate SOC 1 reports to determine key controls.

Step 2: Audit Procedures
Complete the testing of plan-level financial information.
Perform testing including eligibility and data testing, participant contribution and allocation testing, participant loan testing, distribution testing and compliance and timeliness of contribution remittances to the plan.

Step 3: Financial Statements and Management Letters
Assist with preparation of the plan’s financial statements
Provide recommendations and process improvements to management.

Step 4: Review Form 5500
Provide feedback on the Form 5500 prepared by the plan’s third party service providers and allow for timely filling with the regulatory agencies.