DOL Releases Report on Audit Quality

Jun 30, 2015
Bill

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.