DOL proposed new forms in the July 21, 2016 edition of the Federal Register. The proposal may be accessed here and the accompanying proposed regulations accessed here.
The comments submitted in response to the new forms can be found here.
In May 2015 the DOL’s Office of Chief Accountant (OCA) issued a report [click here] after it completed an assessment of the quality of audit work performed by independent qualified public accountants with respect to financial statements associated with 2011 Form 5500 filings. The review found that only 61% of the audits fully complied with professional auditing standards or had only minor deficiencies under professional standards. Further, 39% of the audits contained major deficiencies which could lead to a rejection of the related Form 5500 filing.
Unfortunately, these findings are consistent with results of similar reviews since the 1990s. In other words, audit quality continues to suffer. The OCA has undertaken a strategy to improve these outcomes, starting with communications to plan administrators.
Outreach to Form 5500 Filers
Beginning November 12, 2015, the OCA began sending correspondence, by email, to every Form 5500 filer that is required to include an audit report with its filing. The email includes a subject line of “Your Employee Benefit Plan Audit” along with a letter with a subject line of “Tips for Selecting and Monitoring a Plan Auditor.” [click here]
It should be noted that the OCA will direct the email to the address in the EFAST2 system for the individual who executed the signing ceremony as—or on behalf of—the plan administrator. For service providers that assist clients in managing the filing process using the procedures outlined in EFAST2 FAQ 33a [click here], the service provider will be the recipient of the email described above. It is important for the service provider to forward the email to the plan administrator under the requirement “that the service provider will communicate to the plan administrator/employer any inquiries and information received from EFAST2, DOL, IRS or PBGC regarding the return/report.” Additional explanatory information may be provided by the service provider when forwarding the communication to the plan administrator/employer.
The email identifies several steps that should be considered when evaluating a benefit plan auditor:
There are tools to assist plan administrators in the selection of employee benefit plan auditors, including the following:
Not a Notice of Enforcement
The correspondence is meant to be a soft touch with plan administrators about the importance of selecting a truly qualified audit firm. The email welcomes comments or questions at PlanForAuditQuality@dol.com.
Responses to comments or questions will be provided by Scott Albert, who is Chief of the Division of Reporting Compliance.