Consider this scenario: It’s the beginning of the new year, and the third-party administrator for your company’s 401(k) plan tells you that your organization has surpassed the participant threshold and now requires an annual 401(k) audit… and fast.
While it may be tempting to conduct a quick web search to select the most cost-efficient auditor, taking the steps to vet and hire a qualified partner will save you time, money and resources in the long run.
Here are a few key considerations when selecting the right 401(k) auditor for your organization:
- Experience – The 401(k) environment is very complex, and if your plan is not operating in accordance with the Plan Document, your organization could face various fines and penalties. It’s critical to hire a CPA firm or audit practitioner that has deep understanding of the Employee Retirement Income Security Act (ERISA) regulations, as well as the expectations of the Internal Revenue Service (IRS) and Department of Labor for a thorough, compliant audit.
- Pricing – As the saying goes, “You get what you pay for.” While it’s certainly nice to pay less for a product or service, an extremely low quote often means the firm or practitioner will not provide all the work required for a comprehensive 401(k) audit. Since your organization has a fiduciary responsibility to execute the plan in the best interest of its participants, you need an audit partner who will be meticulous to ensure that your plan is functioning appropriately. While this level of detail-orientation may result in an initially higher fee, it will ultimately pay for itself by helping your organization avoid potential attorney fees or time spent navigating plan noncompliance.
- Rapport with Clients – How a CPA firm or audit practitioner treats their current clients will be indicative of how they’ll treat you. When interviewing various options for audit services, ask for a list of references you can contact. SST recommends asking the following questions when cross-checking referrals:
- How does the firm/practitioner treat you or your staff?
- Do they meet quoted deadlines?
- How’s the quality of their work?
- Was your audit performed remotely, or did they require it to be onsite?
Hiring a CPA firm that specializes in 401(k) audits will not only make a huge difference in the efficiency and accuracy of your audit, it will also give you reassurance that your organization is receiving a quality service.
The experts at SST Accountants & Consultants are equipped and available to assist with your organization’s 401(k) audit. Click here to learn more about our audit and attest services, and contact us today for immediate assistance.
Special thanks to SST Audit Supervisor Chris Adams for providing the content for this post.