QOTW: Plan Audits

New rules went into effect regarding plan audits effective Dec. 15, 2021 (ERISA Section 103(a)(3)(C)). We have heard from a few plan sponsors that the audit process was more time consuming and comprehensive this year to meet the new standards. Last week we asked members what their 2021 plan audit experience was and if it was more complex than in previous years. More than 60 percent of respondents that had a plan audit this year stated that it was completed per usual without complications. Twenty percent stated that the audit was completed much later than usual due to the new standards and/or staffing issues.

Full results:

• The audit was completed with the same timeliness as usual – 63.4%
• The audit was finalized on-time but significantly later than usual, and the audit firm cited new audit standards and/or staffing as reason for the delay – 20.4%
• The plan audit was finalized on-time but significantly later than usual, and the audit firm provided no reason or another reason outside of the plan sponsor’s control as reason for the delay – 4.3%
• The plan audit was finalized on-time but significantly later than usual, due to internal delays – 4.3%
• The plan audit was not finalized before the Form 5500 deadline for reasons outside of the plan sponsor’s control – 3.2%
• Other – 4.3%
   

Comment on the audit and if it was more complex than usual:

• Another contributing factor which was expected was that we switched recordkeepers in the middle of the year and that tie out made things take longer.
• Audit firm cited staffing shortages
• Both my retirement plan auditors and our auditors ran behind this year.  It was a first.
• Completed at the last minute, just like every year!
• Due to Hurricane Ian there was an extension for filing Form 5500 as was relayed by the auditors
• I always insist we be done by the first deadline. We have a great auditor.
• Issues with getting information requests from Empower in a timely manner or the correct information
• It took 3 additional months and much higher cost for audit because the new rules governing plan audits and changing from limited scope audit into ERISA section 103(a)(3)(C)
• It was more complex and took more time to provide the materials requested by the auditor.
• New audit standards was the excuse provided.  But I suspect there might have been staffing issues at the audit firm, as well.  As we pressed auditor for completion, auditor requested more information, but it was information we had already provided early on in the process.
• New audit standards were confusing
• New auditor took longer for first year but fully satisfied with results.
• New auditor, new parameters, to be expected.
• No changes in timing, though new administrator and new process increased frustration.
• No major delays or additional time needed compared to prior years.
• No this year's plan audit and process all went very well and very smoothly.  Our auditors communicate very well with us.
• No, seemed about the same.  My RK thought they were being pickier this year.
• No, we have been doing annual audits for several years, I prepare my compliance files to be able readily gather the documentation we will need to supply.
• Nope, about as usual.
• Not really any more time consuming. A few different questions and representations but no real issues.
• Nothing unusual in the audit process, but still a task I dread each year.
• Our 2021 plan audit was similar to prior years and wasn't more complex or time consuming than usual.
• Our auditors required completion of a management certification before they would begin the audit. They explained that there would be additional tasks behind the scenes that might require additional requests. Then, our primary auditor left the firm towards the end of our audit, which caused a big delay in providing the financials for review
• Our previous auditor doubled our quote for our 401K for 2021 saying staff shortages and new audit standards as the reason for the increase.  We did an RFP and engaged a new auditor and the timeliness of the audit was faster than in prior years.  We were complemented on our responsiveness to requests for information and that our information was organized.  Overall a wonderful experience with the 2021 audit with the new auditor.
• Our recordkeeper was purchased by another company, so we had to deal with merging information from 2 different platforms.
• Outrageously expensive @ $11,000.
• The audit firm provided no reasons; but we were able to see that they started working on it late. We provided all the reports in early June and, they started asking for more samples in late September. It was very stressful. We filed the 5500s on October 17th.
• The audit was more complex and auditors requested many more documents than usual. It was a rush to get the audit report back in time for the deadline.
• The auditors are young and inexperienced. They can't think outside the box. If they answer is not right in from of them, they can't figure it out. Also the communication and handing it off to other auditors is time consuming having to explain the process all over again. We won't be using them next year.
• The communication from our audit firm was virtually non-existant which is not the experience we have had previously.
• We are always down to the wire no matter how hard we try, and this year's new audit standards for things such as verifying the timeliness of deposits and verifying the market value of assets (plain vanilla mutual funds at Vanguard!!!!) made for a frustrating audit experience.
• We changed to a new recordkeeper in 2021 and also added an acquired company, which added complexity, but our auditor also verbalized they have a staffing shortage, and started much later than normal. I was filing the 5500 at 7pm on the due date.
• We had new auditors this year as our former auditors decided they were no longer doing this type of audits.  Still finished timely for filing, and our prior auditors dragged things out to just prior to the filing deadline, so same as usual based on experience with prior year audits, but later than we had agreed to as the new audit firm had some personnel changes and leave of absences, and also had to learn our plans from scratch.
• We had to switch auditors and it was still finalized around the same time
• We were able to timely file even with a change in auditors.
• We were delayed due to vacation schedules of employees at the a) Plan Sponsor, b) our record-keepers, and c) audit firm. It was not an issue but it was the reason it took longer to respond to auditor requests this year and then once we did finally respond, the audit staff and/or partner were out on vacation.
• We were later than usual but still hit the deadline.  We changed HRIS systems and had issues with all of the appropriate forms of eligible compensation being captured correctly for 2021.
• Yes, more complex.