Seventy-four percent of certified public accountant (CPA) audits of retirement plans are handled by auditors who handle five or fewer plans a year, ERISApedia.com found from an analysis of its database of 88,900 plan audits.
Thus, just because a retirement plan adviser and sponsor turn to a CPA auditing firm, expecting it to handle an audit seamlessly, it is important to find out how many plan audits they handle each year, ERISApedia.com says. Only 25% of the 7,600 audit firms working with retirement plans, or 1,900 firms, handle six or more plan audits a year, the research company found. Seventeen percent conduct between six and 20 audits a year, and a mere 8% oversee 21 or more audits a year.
Selecting a truly experienced, entrenched plan auditor is all the more important in light of the fact that a recent study by the Department of Labor (DOL), “Assessing the Quality of Employee Benefit Plan Audits,”
found that there is “a clear link between the number of benefit plan audits performed by a CPA and the quality of the audit work performed.” As a result of its findings, the DOL has directed its internal auditors to target plan audits on those that are handled by CPA firms will smaller employee benefit plan audit practices.
And mistakes do happen. That same DOL report found that 39% of plan audits contained major deficiencies, putting $653 billion and 22.5 million retirement plan participants at risk.