Top 5 DOL Audit Corrections

Sales People Are Not Benefit Plan Experts

Sadly, information for owners almost exclusively comes from financial service salesmen or saleswomen. In most everything I post, I focus on filling the void of information to protect an owners ass_ets. So, the info below, an owner should know. But, your product salesperson won’t be providing.

The DOL recently focused on CPA Auditors and how their audit of benefit plans happen. They reviewed work processes, training, licensing, practice size. Then, they looked to improve CPA practices to fix the problems they found. The DOL wanted to know how well CPA’s understood employee benefit plans.

CPA’s Are Not Benefit Plan Experts

CPA’s are not well trained in benefit plans. That’s what the DOL discovered. They’re not prepared and do not have good processes to perform plan audits. This includes audits for retirement or welfare plans. Welfare is the technical name for plans that are not retirement, this includes health plans, dental, flexible spending accounts, COBRA and other plans.

Owners Are Responsible

Along with their correction to the CPA community, the DOL offered advice to fiduciaries. Fiduciaries are those responsible for the plan, including the auditor’s actions. One of all the hats owners wear includes fiduciary, they are responsible for what they setup for retirement and healthcare. No one else can be substituted in that role. Sorry Owner friends.

Top 5 Audit Failures Identified by the Department of Labor

1 The word “limited scope audits” poorly defines what should be happening.

2 CPA’s from any size firm who perform too few audits, should not be doing audits.

3 Training of CPA’s is insufficient.

4 CPA’s who do not have others audit their work, should not be doing audits.

5 Don’t assume large firms do enough audits

It Takes Time Owners Don’t Have

Benefit plans can burn up a lot of time for owners who aren’t familiar with their responsibilities to lead the audit. The DOL reminded owners that the audit responsibility ultimately is the owner/fiduciary/trustees responsibility. Your job is to look after the best interest of your employee benefits.

What’s the fix?

The best solution is to hire an outsider, not an employee, not a vendor, not a friend. Someone independent, and someone who can review what’s best for the employees with experience and training. That’s it. You can’t trust fiduciary to anyone, but you should not expect a financial advisor or anyone associated with the company or you personally to make recommendations for operating the plan.

It doesn’t have to be expensive.

This doesn’t have to be expensive, look for independence in an outsider, or look for a contractual agreement to assume fiduciary responsibilities, just remember, you can’t pass off your responsibility but you can hire trusted people to help.

I’m focused on helping small business owners by guiding them and not selling them. I can help owners by doing any of the following: preaudit plans reviewing frequently overlooked plan details, act as trustee or fiduciary, reduce HR costs and increase customer satisfaction by using LEAN efficiency techniques.

Join the conversation.