Employee Benefit Plan Audits: Common Issues and Frequently Asked Questions
Plain-English answers to the most common ERISA employee benefit plan audit questions — Form 5500 thresholds, deadlines, and how to choose the right CPA firm.
Assurance Services
Questions about employee benefit plan audits usually concern requirements, scope, assurance, timing, records, and the meaning of the final report. This page addresses the most common issues in plain English and identifies the decisions management should settle before engaging a CPA.
The issues that deserve attention first
An employee benefit plan audit connects payroll, eligibility, participant elections, contributions, distributions, investments, service-provider records, plan provisions, and Form 5500 reporting. Much of the evidence may be held by recordkeepers, trustees, custodians, payroll processors, or third-party administrators, so early coordination is critical.
The most effective response is not to create more year-end spreadsheets. It is to establish a close process in which operational records, subsidiary systems, the general ledger, and the financial statements reconcile on a repeatable schedule.
- Participant census fields that do not reconcile across payroll, HR, recordkeeper, and TPA systems
- Employee deferrals remitted later than administratively feasible
- Incorrect eligibility, compensation, match, profit-sharing, or vesting calculations
- Unsupported distributions, stale forfeitures, delinquent participant loans, or unrecorded plan expenses
- A draft Form 5500 that does not agree with the audited financial statements and schedules
How to reduce the risk
Management can improve both reporting quality and audit efficiency through a small number of durable practices:
- Close and reconcile significant accounts monthly, with evidence of preparation and review
- Maintain current contracts, policies, minutes, approvals, estimates, and third-party reports in a controlled repository
- Assign ownership for every material schedule and document the source, method, assumptions, and review
- Investigate unusual trends and old reconciling items before the auditor asks about them
- Communicate new transactions, disputes, financing, system changes, control failures, and suspected fraud promptly
- Perform a pre-audit quality review using the prior-year adjustments and management comments as a checklist
Frequently asked questions
Which plans generally need an audit?
The Department of Labor states that plans with 100 or more participants generally require an audit with Form 5500. Transition rules, the method used to count participants, and small-plan eligibility conditions can change the result, so confirm the filing category each year.
What is an ERISA Section 103(a)(3)(C) audit?
It is an audit in which the plan administrator instructs the auditor not to perform procedures on qualifying investment information prepared and certified by an eligible institution. The auditor still performs procedures over other areas and evaluates whether the election and certification meet applicable requirements.
Who is responsible for the Form 5500?
The plan administrator is responsible for a complete and accurate filing, even when a TPA, auditor, recordkeeper, or other service provider helps prepare it.
Why do auditors request payroll data?
Payroll data supports tests of participant eligibility, eligible compensation, elections, deferrals, employer contributions, and the timing and completeness of deposits.
What is the filing deadline?
ERISA generally establishes a filing deadline within 210 days after plan year-end; calendar-year plans commonly file by the last day of July unless a valid extension or other relief applies. Confirm the date for the specific plan year.
How can sponsors reduce audit delays?
Assign one owner, obtain service-provider reports early, validate the census before delivery, reconcile contributions and distributions, prepare the draft Form 5500, and resolve late remittances or operational issues before final fieldwork.
Questions to ask a prospective CPA firm
The engagement partner should be able to answer practical questions before appointment:
- What experience does the team have with employee benefit plan audits and the applicable reporting framework?
- Which standards, regulatory guides, contractual provisions, or submission requirements will govern the work?
- Who will manage the engagement day to day, and when will the partner communicate with management and governance?
- What information is needed before fieldwork, what will be selected later, and how will secure documents be exchanged?
- What assumptions support the fee and timetable, and how will scope changes or readiness problems be handled?
- What independence, licensing, peer review, quality management, specialist, or continuing education considerations apply?
Choosing the right assurance level
An audit provides reasonable assurance and an opinion on the financial statements. A review provides limited assurance principally through inquiry and analytical procedures. A compilation presents financial information with no assurance. Compliance examinations, agreed-upon procedures, single audits, and program-specific engagements have different objectives and should not be substituted solely because their names sound similar.
Start with the exact user requirement and the decision the report must support. Selecting too little assurance can lead to rejection and rework; selecting more than users need can add cost and time without a corresponding benefit.
Next step
Schedule a scoping discussion with Dohan CPA to review the reporting requirement, intended users, current records, prior reports, and deadline for employee benefit plan audits. The firm should confirm engagement acceptance, independence, staffing, and final scope before any service is promised.
Authoritative sources
- Selecting an Auditor for Your Employee Benefit Plan - U.S. Department of Labor
- Reporting Compliance Enforcement Manual - Introduction - U.S. Department of Labor
- Form 5500 Corner - Internal Revenue Service
General educational information only. This page is not accounting, auditing, tax, investment, or legal advice and does not create a CPA-client relationship. Requirements and standards can change and depend on specific facts and agreements.