Once you have selected an auditor for your 401(k) Plan and have worked through the initial items to get the audit started, they 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 Description 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 walkthrough 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:
- Check copies.
- Amortization schedules.
- 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 it’s 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.
It’s vital that you hire a trusted auditor when it’s time for your plan's audit. At Summit CPA we specialize in retirement plan audits. We have the ability to offer assistance entirely off-site with little or no distraction to your daily office routine. We also offer flat-fee pricing so there are no surprises on your bill when the job is complete. For assistance contact our office at (866) 497-9761 to schedule an appointment.