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I Engaged An Auditor for My 401(k) Plan – Now What?

Published by Kim Moore on Apr 1, 2021 6:00:00 AM

Necessary Audit Documentation

If you just discovered that you need a 401(k) plan audit, the first thing you need to do is engage an independent auditor to conduct the audit (see our previous blog post on what is needed in a plan engagement letter). Once that is completed, your auditor will provide what is called a “PBC” list. The initials PBC stand for Prepared by Client. All of the items requested will need to be provided for the audit to be completed. So, what types of documentation will be requested?

The following information is most typically requested by the plan auditor:

    • Plan Documents – you will need to provide basic plan information such as the Adoption Agreement, Summary Plan DescriptionHow to Prepare for your 401k Audit and IRS Opinion/Determination Letter.

    • Plan Census for the year.

    • Discrimination testing for the year.

    • Form 5500 Draft.

    • Plan Financial Information (Trust Report, Schedule of Plan Activity).

    • Asset Certification Letter if applicable.

    • SOC Reports – SSAE 18 reports

Once the above items have been provided, your auditor will select items for testing or walk-through procedures. They will not test all participants, but will review selected items to ensure all transactions were completed accurately and timely. They will also need information from your providers such as:

    • Amortization schedules.

    • Check copies.

    • Enrollment forms or rollover support.

As the auditor works through the testing, they will encounter items that require follow-up or resolution.

The key to working with your auditor is constant communication. Make sure you let them know if something can’t be located or if its an unusual transaction. If you don’t understand a request, follow-up to make sure you provide what is really needed. Constant dialogue will help make the process as smooth as possible.

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At Summit CPA, we specialize in retirement plan audits. If you would like to discuss our audit process in more detail or need an audit contact our office at (866) 497-9761 to schedule an appointment. We can help you navigate the world of the 401(k) audit as proficiently as possible. We also offer off-site assistance and flat-fee pricing so there are no surprises when the job is complete.

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