Your time is precious and you want to use it effectively. The last thing you want to face is multiple requests from auditors that make you feel like you’re running around without purpose. It doesn’t have to be this way. A little preparation on your end will help the process run smoother and give you fewer headaches.
If you understand what your auditors need, then it’s possible to work together in a streamlined, non-invasive process. And that allows more time for your auditors to focus on ways to add value to your benefit plan. Here are a few things you can do to ensure your business is prepared for your audit:
Compile Plan Documentation in Advance
Do you know what plan documents your auditors will ask to see? Here is a list of what you need to have completed and ready for their review:
- Basic plan document
- Adoption agreement
- IRS opinion/determination letter
- Summary plan description
- Any amendments to the plan
- Loan policy
- Service agreements with all service providers of the plan
- Census data
- Compliance testing/results/corrections, including the timing of the corrections
- Statement of Controls Type II reports (formerly known as the SAS 70 report) for service providers
- Year-end payroll data
- Fidelity bond coverage policy
Save and Organize Custodian or Recordkeeper Documentation
Auditors are now operating in the electronic era. When paper documentation is not available, they do need electronic files that are easy to navigate. That includes things like Word®, Excel® and Acrobat®. In addition, these files should not include sensitive data like social security numbers since they have to be kept in the audit file. It’s important that you ask service providers to eliminate or mask any sensitive data when they provide documentation.
So what documentation will your auditors be looking for from your recordkeepers? The following are key in the audit process:
- Annual plan trust reports. This should include certification as to the completeness and accuracy of the data contained within the report, if available.
- Annual participant recordkeeping reports. Access will also be needed to quarterly participant statements.
- Investment information. Documents from the trustee or custodian, and possibly the investment advisor, regarding investments, will be needed. They should include the fair value of those investments and the underlying methods for determining those values.
All reports should include information at both the plan and participant levels. Typically, the areas where this detail is needed includes contributions, distributions (including loans) and investments.
Ensure a Smooth Audit
While the auditing process can be daunting for all parties involved, the more prepared each party is will determine how smooth of a process it will be. If you’re encountering frustrations and difficulties with your part of the process, take a step back, evaluate your role and the roles of others. See if there’s a way to increase efficiency and limit the stresses of the process. You can save your valuable time by preplanning and preparing. If you need assistance with determining how you can streamline the process on your end, contact Rea & Associates. Our team of Ohio benefit plan auditors can help you make sense of all of the roles within the audit process and show you what you can do to ensure a smooth process.