Many third-party providers such as record keepers, custodians or trustees will have something called a SOC Report which is a report on controls at a service organization relevant to user entities’ internal control over financial reporting.
SOC Reports are prepared to provide information related to the internal controls over specific portions of their internal operations.
WHAT DO SOC REPORTS INCLUDE?
Typically, the reports provide a description of the internal controls in place over functions such as:
- New plan setup
- Accuracy of participant transactions
- IT controls (access security, program change, backup, daily maintenance)
- Daily asset pricing, custody of assets
- Reconciliations and various other controls specific to the responsibilities of the third-party provider
The report may also include information from an independent auditor on testing that was done on the performance of the controls over a specified period (usually one year). These reports are important for your 401(k) plan as they document the work completed by your service providers with regard to the accuracy, completeness, and timelines of those activities.
IS AN SOC REPORT PART OF A 401(k) PLAN AUDIT?
If your Plan requires an audit, your auditor will request a copy of relevant SOC Reports as part of their audit documentation request. They also provide valuable information to you as the Plan Sponsor regarding the controls they have in place to ensure your Plan transactions are completed accurately, completely, and timely. Ask for a copy of the report, review it and ask questions if you have any concerns regarding the testing findings identified by the SOC auditor.
As the plan sponsor, when it’s time to audit your 401(k) plan, it’s vital that you hire an experienced auditor to ensure your plan is in compliance. At Anders 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.
To get started, request a free 401(k) audit consultation below or contact the team at (314)-886-7913 to schedule an appointment.
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