DOL Provides Guidance on Selecting an Employee Benefit Plan Auditor

  • Audit

Stacy SmithStacy J. Smith, CPA

If your company is large enough to require an employee benefit plan audit (>100 eligible employees), you may have recently received a letter from the Department of Labor regarding the qualifications of the auditor you select to perform your audit.

You may be asking yourself, “Why is the DOL now providing this guidance?” In a May 2015 report, the Employee Benefits Security Administration (EBSA) released data on the prevalence of deficiencies in employee benefit plan audits. The study analyzed 400 plan audits for the 2011 filing year – out of a total of 81,162 reports that were filed for the year. Of those audits, 39% were found to have significant deficiencies which would lead to a rejection of the Form 5500 filing. The study also revealed a link between the number of plan audits a firm performs and the deficiency rate of a firm’s audit reports. CPAs performing the most plan audits had a deficiency rate of 12%, while firms performing only a few plan audits had a 76% deficiency rate.

Below are some factors the DOL suggests you consider when selecting the auditor for your employee benefit plan.

  1. The number of employee benefit plans the CPA audits each year, including the types of plans. Mize Houser audits approximately 60 benefit plans annually, including 401(k) plans, ESOP plans, health plans, and pension plans.
  2. The extent of specific annual training the CPA received in auditing plans.
    Our audit personnel attend training specific to employee benefit plans on at least an annual basis, including live classes, webinars, and national conferences. In addition, we receive regular updates on changes and new developments.
  3. The status of the CPA’s license with the applicable state board of accountancy.
    Mize Houser is in good standing with the Kansas and Missouri Boards of Accountancy.
  4. Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the American Institute of CPA’s for investigation.
    Mize Houser has not been the subject of any DOL findings or referrals, nor have we been referred to any state board of accountancy or the AICPA for investigation. In the past few years, the DOL has inspected several of our employee benefit plan audits, and no findings or issues resulted from any of these inspections.
  5. Whether or not  your CPA’s employee benefit plan audit work has recently been reviewed by another CPA (this is called a “Peer Review”) and, if so whether such review resulted in negative findings.
    Our most recent peer review was conducted in July 2015 and approximately 5 benefit plans were selected for review.  No negative findings resulted from our peer review.

We want to assure you that our firm is well qualified to perform the audit of your plan and has been auditing employee benefit plans for over 30 years. We would appreciate the opportunity to talk with you about your employee benefit plan audit. If you have any concerns about the above factors in regards to your current audit firm, please contact me at 785.233.0536 or You can also learn more about our audit services on our website.