If you’re a plan sponsor, you may breathe a sigh of relief now that the October 15 filing deadline is over. Reflecting back on this benefit plan season, it was more challenging than prior years for both plan sponsors and audit teams due to remote working environments, considerations of applying the Coronavirus Aid Relief and Economic Security Act (CARES Act), and in some cases, spreading preparation of the work among fewer individuals at the plan sponsor.
More Efficient Plan Audit
There are several tips that plan sponsors can apply for more efficient and effective audits in the future. The following strategies have allowed us to be successful but are also important reminders for the 2021 benefit plan season:
- Plan, plan and plan. By planning the audit early, plan sponsors can ensure that it fits into a timeframe that allows them to focus on the audit while also performing all of their daily responsibilities. Audit teams are responsible for sending the client assistance list well in advance of scheduled fieldwork to ensure the plan sponsor has adequate time to review the list and pull together the requested information. Additionally, audit teams will prioritize requests.
- Plan sponsors should discuss new plan features and amendments with the audit team in advance of fieldwork.
- Ensure copies of significant agreements related to the plan are readily accessible.
- Whether the audit team and plan sponsor are working in a remote environment or on site, collaboration between the plan sponsor and the audit team on a daily basis is extremely important. By setting aside specific time each day to answer questions, the audit will be completed in a timely manner.
- Plan sponsors should consider granting audit teams read-only access to the trustee’s or custodian’s website in order for the audit team to access reports and participant records without having the plan sponsor take the time to download the information. Additionally, consider granting the audit team read-only access to payroll systems so that they can pull payroll reports themselves. If you choose to do this, remember that it has to be read-only access.
- At the end of the audit, consider discussing additional efficiencies that could be applied to the next year.
The 2021 employee benefit plan season will bring additional considerations to the audit process. The provisions of the CARES Act that were adopted by plan sponsors in 2020 will be subject to testing by the audit team. Also, plan sponsor management should begin to discuss the effects that Statement on Auditing Standards No. 136 will have on the plan. Additionally, some plan sponsors may choose to early-adopt the standard, as Statement on Auditing Standards No. 136 is effective for plan years ending on or after December 15, 2021.
Whether it’s looking for efficiencies, assistance with CARES Act provisions, adoption of Statement on Auditing Standards No. 136, or other employee benefit-related services, our team is here to help. Contact your engagement team or a member of the ERISA group at Schneider Downs for additional information.
