If your benefit plan was audited, then you likely spent hours going through files pulling basic information for your auditors. You may have pulled files from storage or from different offices. Worse, you may have educated your plan auditors on the basics of the plan when they had a plan document and summary plan description to read, which you gave them. You may have even found yourself researching payroll records for various employees for the entire fiscal year to determine why their employee contributions are different than the ones calculated by the auditors.
For this “privilege” of going through your files, reciting the plan document, and perhaps doing endless research on contribution variances, were you rewarded with a bonus check, gift certificates, or a even a thank you card? Odds are your company was sent an invoice requesting prompt payment for services rendered. The bill may even contain a change order for extra time the auditor spent asking you about files and variances you spent hours researching.
If the example above sounds like your story, then, sadly, much of your time wasted may be due to auditors that are inexperienced and do not take your audit seriously. Even worse, your company may have contracted with the accounting firm that simply offered the lowest price. This may seem very sensible until you are spending more time pulling files and answering questions than is reasonable. Also, this firm’s bid will not seem like a bargain if you are held liable for a deficient audit upon a Department of Labor examination. The Department of Labor frequently cites inexperience as the reason for a deficient audit. So in this case, what are you really paying for?
Another scenario, you may have contracted with a firm with significant benefit plan audit experience that sends you inexperienced auditors. This is done by the firm to control costs and give a more competitive price. In this situation, you want to make sure that you receive the quality of service for the price you paid. It just doesn’t make sense to pay Rembrandt to paint your portrait only to have his newly hired apprentice do so.
Even the best audits cost you time and money. However, you can get significantly better value by finding a firm in your area that is a member of the AICPA Employee Benefit Plan Audit Quality Center. Member firms demonstrate a commitment to quality. Contracting with such a firm will make the low-bidding, deficient auditor scenario less likely. On the plus side, there should be plenty of firms in your area (or nearby) that are members from which you can get reasonable bids.