The ERISA Audit: Your Fiduciary Responsibilities and Other - - PowerPoint PPT Presentation

The ERISA Audit: Your Fiduciary Responsibilities and Other Considerations

Lara E. Fuller, CPA Audit Senior Manager

AGENDA

• Understanding your responsibilities
• Communication
• Understanding common errors

YOUR RESPONSIBILITIES

• The Plan Sponsor is a primary fiduciary of the plan

– Perform duties solely in the interest of the plan participants – Cannot remove yourself even if outsourcing plan components – Compliance responsibilities

• Audit
• 5500

YOUR RESPONSIBILITIES

• Best Practices ‐ General

– Use direct corporate trustee (not an individual name) – Create a formalize committee for plan oversight – Obtain fiduciary liability insurance (not the same as required ERISA bond insurance) – Create and follow an investment policy – Required to receive full and detailed disclosure of all fees – Use professionally constructed and managed investment portfolios – Deliver and document employee education programs

YOUR RESPONSIBILITIES

• Best Practices – Financial Reporting

– Ensuring controls are in place and working

• Preventative
• Detective
• SSAE 16 user controls

– Accounting policies – Investment valuation

• Responsibility cannot be outsourced

– Actuary reports – Financial statement preparation – Plan expenses

YOUR RESPONSIBILITIES

• Best Practices ‐ Compliance

– Plan audit

• Deficient audit can lead to DOL/IRS fines on plan sponsor

– 5500 preparation

• Ensuring all compliance testing is complete/accurate and corrected when

necessary

COMMUNICATION

• Communicate early and often
• Who should you communicate with?

– Auditors – Third‐Party Administrators – Actuary – Legal

AUDITORS

• Request a list of items the auditors are going to need
• Review the list with your auditors
• Assign dates as to when the auditors will need the information
• Confirm certification and SSAE 16 report availability
• Discuss any amendments to the plan
• Request daily/weekly status reports or meetings
• Stay in communication with the auditors after fieldwork and before issuance

THIRD‐PARTY ADMINISTRATORS

• Investment providers and/or record‐keepers
• Verify if and when certification and SSAE 16 reports are

available

• Discuss with them when other information will be available

– Plan reports – Participant reports – Discrimination testing – Form 5500

• Discuss how information will be distributed

– To you, to the auditors directly, website?

ACTUARY

• For defined benefit plans
• For some health and welfare plans
• Discuss when the reports will be available
• Is the information as of the beginning or end of the year?

COMMON ERRORS

– Failure to amend plan for tax changes – Compensation

• Not following the definition in the plan document

– Eligibility

• Improper inclusion and/or exclusion

– Vesting – Participant elections

• Error in setup
• Failure to restart contributions when limits met in prior year

– Timely remittance of contributions

COMMON ERRORS

– Loans

• Stopping payroll deductions
• Not paying off loan in 5‐year required payoff

– Hardship withdrawals

• Only for certain situations
• Not stopping contributions for 6 months
• Not restarting contributions after 6 months

– Discrimination testing

• Not correcting any failures
• Not performing all required tests

CORRECTION OPTIONS

• Self‐correction

– Plan sponsor corrects on its own – No approval or guarantee from IRS – Use for insignificant and recent failures

• Voluntary Correction Program

– Plan sponsor corrects on its own – Obtains approval from the IRS

• Audit Closing Agreement

– Plan sponsor is forced to correct as a result of an IRS exam

SUMMARY

• Know your responsibilities

– Avoid issues

• Communicate early

– Know what to expect – Timing

• Be aware of the common errors

– To keep from having them – To be able to correct them quickly and appropriately

QUESTIONS