Employee benefit plans help you retain top talent, encourage productivity, and boost team morale. When you run a larger business, these plans are subject to annual audits, which are typically performed by specially trained certified public accountants (CPAs). While this may sound daunting, it’s an important way to ensure your program is financially secure and in compliance with federal regulations. Below is an overview of why audits are necessary and how you can prepare for one.

Which Companies Are Required to Get Benefit Plan Audits? 

Any company that offers benefits, such as 401(k) accounts, health insurance, and employee stock ownership, and has 100 or more eligible participants, must get annual employee benefit plan audits. The Employee Retirement Income Security Act of 1974 requires that the report be filed with both the Internal Revenue Service (IRS) and the U.S. Department of Labor. Failing to do so or submitting an inadequate report can result in penalties. 

The primary purpose of these audits is to protect employees and ensure trustees aren’t inappropriately using plan assets. However, audits also protect businesses from fraud and help prevent costly internal errors. With the information you receive from the report, you’ll be able to identify ways to save money and make better decisions regarding your plans.

What Can You Expect From the Process?

During the audit, your CPA will carefully analyze each aspect of your benefits package to look for management and spending areas that can be improved. They will assess any risks within your plan and evaluate its effectiveness.

Be prepared to provide your audit team with an explanation of policies and procedures that impact the plan’s operation, including those regarding investments. Have financial documents readily accessible, as well as paperwork related to plan activity and participants.

If you need to complete an employee benefit plan audit, turn to Engelson & Associates in Holmen, WI. Their team of highly skilled CPAs is committed to delivering quality audits to help you manage a successful and compliant benefits program. Serving the Tri-State Area, they offer 100 years of combined experience and stay updated on all of the latest rules and regulations. Call (608) 526-3437 to schedule an appointment, or visit them online to learn more about the services they provide.