EMPLOYEE BENEFIT PLAN AUDITS
THE POWER TO MAKE THE COMPLEX SIMPLE
Our Experience
If your business provides an employee benefit plan with more than 120 eligible participants, you are required by the Department of Labor to conduct an annual audit. This requirement applies to pension plans, 401(k) plans, 403(b) plans, ESOPs and other defined benefit plans. It is designed to act as a safeguard against fraud and abuse, and there are a multitude of penalties that can result if the required filings are not done correctly.
The audit process can be complicated, time consuming, and frustrating. That’s why choosing the right partner to help you navigate your employee benefit plan audit matters.
The members of Gray, Gray & Gray’s Employee Benefit Plan Audits Practice Group are experienced professionals with specialized knowledge who perform every benefit plan audit quickly and efficiently, including preparation of Form 5500 and other filings for benefit plan engagements.
Then we take the next step by giving you the power to do more. With our expert analysis, an employee benefit plan audit can identify ways to help you more effectively and efficiently manage your employee benefit plan.
Our dedicated practice group is the best way to ensure you are receiving the quality of service you need, while also getting more from the benefit plan audit process.
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ESOP Plans
Business owners looking for a viable exit strategy or wanting to reward their employees by making them business owners should consider forming an Employee Stock Ownership Plan (ESOP).
ESOPs can be beneficial for both owners and employees. Owners who are retiring or exiting the business receive liquidity of their ownership interest. Employees become part owners with future benefits tied directly to the financial performance of their company. Read More
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Frequently Asked Questions (FAQ)
If your plan had 120 or more eligible participants at the start of the plan year, the Department of Labor requires an annual audit. Although recent regulatory changes allow some small plans to qualify for exemptions under specific conditions, do not assume exemption if you are near that threshold. Penalties for failing to file a complete and accurate Form 5500, including the audit report, can be severe, sometimes amounting to thousands of dollars per day.
The audit reviews plan financial statements, participant data, contributions, distributions, investment activity, and compliance with the plan document. We verify participant eligibility, timely remittance of contributions, and accurate benefit payments. Beyond numbers, the audit assesses governance and plan administration. Identified errors or control weaknesses allow you to address issues before they escalate.
Late remittance of employee deferrals is a common finding; the DOL requires contributions to be deposited as soon as administratively feasible, and delays are not acceptable. Other frequent issues include improper determination of eligible and ineligible employees, definition of compensation errors, and not having proper documentation. Many errors can be corrected through IRS and DOL voluntary programs, but early detection via an audit is far less costly than regulator enforcement.
Benefit plan auditing is specialized. The DOL has criticized firms that perform these audits infrequently, noting that audit quality improves with experience. As a firm with a dedicated employee benefit plan practice and membership in the AICPA’s Employee Benefit Plan Audit Quality Center, we offer expertise that a generalist firm cannot match. Given the stakes, the audit partner’s quality is critical.
Form 5500 is due seven months after the plan year ends (July 31 for calendar-year plans) with a two-and-a-half-month extension available until October 15. The audit usually takes several weeks once our Audit team has all the required information. Engaging with us early allows ample time and reduces stress. Waiting until June to file by July 31 risks errors and pressure.
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Our Memberships
In order to better serve our audit clients and to remain on the cutting edge of audit regulations, Gray, Gray & Gray is an active member of the Public Company Accounting Oversight Board (PCAOB) and the Employee Benefit Plan Audit Quality Center (EBPAQC). These affiliations give you added assurance that your benefit plan work will be done in accordance with the latest requirements and given the appropriate attention by the specialists assigned to the engagement. This ensures that all of the applicable ERISA and DOL rules and regulations will be followed and all of the required disclosures will be made.
