You read that correctly. What in the world is a virtual 401(k) audit, you are thinking. They are very similar to a traditional audit, however the auditors do not come to you. All the procedures of the audit are performed by the audit firm at their location. They do not come out to your location and set up camp for a few days or even weeks. Sounds like a dream come true doesn’t it! Let me explain the process in a little more detail.
a) After the engagement letter is signed by the client and returned to the auditor, the fun can begin. A provided by client (PBC) list is emailed to the client and a preliminary audit call is setup to discuss the Plan and any significant issues or changes.
b) The PBC list used is basically a “live” excel spreadsheet that has its own unique, secure website. The client can open it up, type responses to questions, or drag and drop files to a line requesting information.
c) As the client works through the requested items at their own pace, the auditor has set up “alerts” on the “live” provided by client listing that alerts them of any changes or additions to the spreadsheet. As the client works through the requested information, the auditor can go grab the information and work through it.
d) Some calls are necessary to ask some management representation questions, internal control related questions, or to simply alert the client of any significant issues found that need immediate attention.
e) After all necessary documentation is ascertained and testing is completed by the auditor, a draft version of the financials are then sent to the client for review and their approval. A management representation letter is also sent to them to sign and return to the auditor after the client reviews the financials and approves of them.
f) The signed management representation letter is then signed and returned to the auditor and a final version of the financials are sent to the client to file with their 5500.
Simple as that. So instead of hustling for a few weeks to a month to gather information needed for the audit, the process can be done at a pace that is comfortable to the client.