In May of 2015, the Department of Labor released a report on the level and quality of audit work performed by independent public accountants with respect to audits of employee benefit plans. The assessment involved a sample size of 400 plan audits for plan years beginning in 2011. Since the population of plan auditors is so diverse and heavily skewed to those CPA firms that audit a small number of plans, the sample was designed to look at the relationship between auditor characteristics and audit quality.
The results were not good. The report found that 39% of the audits had major deficiencies with respect to one or more relevant GAAS requirements which would lead to rejection of a Form 5500 filing. It found that there was a clear link between the number of employee benefit plan audits performed by a CPA and the quality of the audit work performed. Furthermore, CPA’s who performed the fewest number of employee benefit plan audits annually had a 76% deficiency rate. To the contrary, firms performing the most plan audits had a deficiency rate of only 12%.
The report emphasized the need and responsibility of a plan sponsor, the fiduciary, to hire a qualified CPA firm. Ary Roepcke Mulchaey is a PCAOB registered firm with a benefit plan audit practice that has earned a strong reputation among clients for being efficient, effective and responsive. ARM has audited hundreds of employee benefit plans over the past 30 years and has developed a depth of expertise to deliver quality audits for all of our clients each and every year.