You have completed the due diligence required and selected an audit firm to complete the audit. What you can expect from your audit firm?
The first item the audit firm should work with you on is an “engagement letter”. This document defines the responsibilities of both your company and the audit firm regarding the audit. It outlines the objectives of the project and clarifies the limitations of what the auditor can and cannot complete. Here are several technical items that will be included in the engagement letter:
- Objectives and scope of the audit.
- Responsibilities of the auditor and management of the plan.
- Identification of the financial reporting framework that is used by the plan.
- A statement about the inherent limitations of an audit.
- A description of the expectations regarding the report to be produced at the conclusion of the engagement.
- Establish the overall price that you will pay to complete the audit or provide an hourly rate of service. It may also include a time frame for completion.
The engagement letter is a written agreement (or contract) between you and the audit firm that you have selected to complete the audit. It’s essential that you carefully read all materials included. At this time you should ask questions if you are unsure of any items that are included or excluded from the engagement letter.
When you’re comfortable with the terms specified in the letter, you will need to sign and date the letter, keep a copy for yourself, and return the original to the audit firm. Then the real work required to complete your 401(k) audit can begin.
Hiring a CPA firm that specializes in pension or 401(k) plan auditing will make a huge difference in how smoothly your audit goes. At Summit CPA we also offer flat-fee pricing for pension and 401(k) audits so there are no surprises when you receive your bill. We also have the capability to assist you entirely “off-site”, and with little or no distraction to your daily office routine. To find out how we can assist your business, contact our office at 866-497-9761 to schedule an appointment.