How to Prepare for an Employee Benefit Plan Audit

Assurance Services

A successful employee benefit plan audit starts before fieldwork. This preparation guide gives management and governance a practical sequence for confirming the requirement, closing the records, organizing support, responding to selections, and protecting the target report date.

Start with the requirement and the deadline

Federal law generally requires plans with 100 or more participants to include an audit with the annual Form 5500 filing, although transition rules and exceptions can affect the determination. Some smaller plans can also require an audit if specified eligibility conditions are not met. The plan administrator should confirm status using current Form 5500 instructions and professional advice.

Obtain the exact document that creates the requirement and share it with the CPA. Confirm the fiscal period, reporting entity, basis of accounting, report recipients, supplementary schedules, compliance work, portal or electronic submission, and due date. Build backward from the delivery date to allow time for management review, governance approval, corrections, and unexpected evidence requests.

Assign clear owners

Name one audit coordinator who controls the request list, versioning, secure uploads, status meetings, and routing of questions. Assign schedule owners for cash, receivables, revenue, payables, debt, fixed assets, equity or net assets, legal matters, and industry-specific schedules. A board, committee, owner, or senior executive should remain available for governance communications and final approval.

Third-party information should be requested early. Banks, lenders, custodians, attorneys, property managers, recordkeepers, trustees, administrators, valuation specialists, and grant managers may need lead time and may require management authorization before responding.

Core readiness checklist

Prepare final, internally reviewed schedules rather than raw reports. At a minimum, assemble:

Current executed plan document, amendments, summary plan description, IRS letters, and governance minutes
Complete participant census with eligibility, compensation, deferrals, employer contributions, and status changes
Payroll registers, contribution reconciliations, remittance evidence, and late-deposit analysis
Trust and recordkeeper reports, certified investment information, investment statements, and SOC reports
Distribution, loan, forfeiture, rollover, and plan-expense reports with supporting approvals
Draft Form 5500, prior audit and management communications, ERISA bond, service contracts, and compliance testing

Make every schedule audit-ready

Each schedule should state the entity, period, preparer, preparation date, source system, and general-ledger accounts covered. It should foot, cross-foot, and agree to the final trial balance. Explain reconciling items, identify estimates, link or index supporting documents, and remove duplicate or superseded versions.

Do not force an unexplained difference to zero. A clear reconciliation that isolates a real issue is more useful than a schedule that appears to tie but cannot be reproduced. When an adjustment is posted, update the affected schedule, financial statements, and downstream reports so all versions remain aligned.

Resolve common delay points before fieldwork

The following issues frequently create rework or threaten the reporting date:

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

Prepare for selections and follow-up

For employee benefit plan audit work, expect the auditor to select transactions, balances, agreements, or participants based on materiality and risk. Maintain complete populations so selections can be reproduced. Provide source evidence rather than screenshots without context, and explain how each item moves from initiation through authorization, recording, settlement, and review.

Questions are normal. The audit becomes inefficient when management sends partial support, changes answers without explanation, or allows requests to sit unresolved. Use a regular status cadence, flag genuine constraints early, and close each request with a complete answer or a documented action plan.

Finalization checklist

Before report release, management and governance should confirm that:

All proposed adjustments are accepted or formally evaluated and the final trial balance is locked
The financial statements, notes, supplemental schedules, and any filing or electronic submission agree
Subsequent events, litigation, commitments, related parties, fraud inquiries, and going-concern matters are updated
Management representations are accurate and signed by people with appropriate knowledge and responsibility
Required governance communications and management responses are complete
The final report package, distribution list, retention plan, and corrective-action responsibilities are approved

How Dohan CPA can help

Dohan CPA can scope the reporting requirement, issue a tailored request list, establish milestones, and perform the employee benefit plan audit after confirming independence and engagement acceptance. Separate accounting assistance may be available when permitted, but management must retain responsibility and safeguards may be required.

The best next step is a readiness conversation before the reporting period closes. Bring the requirement, prior report, current trial balance, organizational chart, and target delivery date so the team can identify dependencies early.

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.

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.