Audit Communicationsand

DOL Initiatives

Selecting a Plan Auditor & DOL Initiatives

Brent Clark

Audit Senior Manager, Pugh CPAs

Agenda

• Selecting an Auditor

• DOL Initiatives

• Limited Scope vs. Full Scope Audit

• Audit Communications

SELECTING AN AUDITOR FOR YOUR PLAN

Satis-factory

68%

De-fi-

cient32%

Deficient Audit Quality

DOL update 5/5/2014

State of Tennessee

SELECTING AN AUDITOR FOR YOUR PLAN

1-2 3-5 6-24 25-99 100-749 750+0

50

100

150

200

250

300

350

400 Total # of Plans

# of Audits

Experience Matters

SELECTING AN AUDITOR FOR YOUR PLAN

50% of Plan Auditors

• Audit 1 or 2 plans

• 6% of audited plans

• Covering 2 million participants

1% of Plan Auditors

• Audit 100 or more plans

• 42% of plans audited

• Covering 91 million participants

Who does the auditor work for anyway?

SELECTING AN AUDITOR FOR YOUR PLAN

The audit’s purpose:

• Protect plan participants and beneficiaries

• Fulfill the sponsor’s fiduciary obligations to the plan

Plan Sponsor Resource Center

SELECTING AN AUDITOR FOR YOUR PLAN

It is the plan administrator’s responsibility to ensure the plan obtains a quality audit in accordance with ERISA and the DOL.

www.aicpa.org > Interest Areas > Employee Benefit Plan Audit Quality Center > Resources > Plan Sponsor Resource Center

• Solicit RFPs from Audit Quality Center members • Obtain references and discuss the auditor’s work with other clients• Verify the auditor’s license is valid and up-to-date.

Audit Quality Study

DOL INITIATIVES

• Nationwide study of 400 plan audits covering 250 firms

• Still ongoing

October 2013-September 2014

• Requests for workpapers are sent to the plan administrators

• Desk review is performed by the Office of the Chief Accountant

DOL INITIATIVES

• Achieved over $1.6 billion in total monetary results in FY 2013

Employee Benefits Security Administration

• $281 million restored Informal Complaint Resolution

• $911 million Prohibited Transactions Corrected/Plan Assets Corrected

• $423 millionPlan Assets Restored/Participant Benefits Recovered

• $72 millionVoluntary Fiduciary Correction Program

http://www.dol.gov/ebsa/newsroom/fsFYagencyresults.html

Lost Participants

DOL INITIATIVES

• According to the DOL the State of TN Unclaimed Property process should not be used for lost participant’s funds in active plans

• November 2013 ERISA Advisory Council Report recommends • Development of industry best practices• The DOL issue an update to FAB 2004-02 and address the

fiduciary obligations to locate lost participants • Further coordination with other government agencies

Late Deposits of Employee Contributions

DOL INITIATIVES

An employer is required to deposit employee contributions

and participant loan payments as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets, but in no event no more than …

(a) 90 days after the contributions are paid by employees or

withheld from their wages for a welfare benefit plan or

(b) the 15th business day following the end of the month in

which amounts are contributed by employees or withheld

from their wages for a pension benefit plan.

Small Employer Safe Harbor

DOL INITIATIVES

• Small employer is eligible to file Schedule I or SF – not Schedule H• Seven business days of payroll

date• Reasonable conclusion –

contributions in excess of seven days are at risk of challenge by the DOL