One often-overlooked administrative requirement for Employee Benefit Plans (EBPs) is the need for annual audits—generally required for plans with more than 100 participants. While mandatory, these audits offer valuable benefits to both the plan and its sponsor or administrator. Rather than being intrusive, EBP audits can foster stronger internal controls, improve understanding of plan operations, and offer meaningful insight into the plan’s financial position—especially when there is strong collaboration between auditors and clients. These audits don’t require a national firm either; Vesta is a prime example of a local firm with the experience and expertise to conduct thorough, high-quality EBP audits.
A key requirement for EBP audits is auditor independence. A firm that maintains the plan’s financial records, for instance, would not meet the independence standard. Independence is critical because it allows the auditor to perform with the “professional skepticism” mandated by the American Institute of Certified Public Accountants (AICPA) and the Department of Labor (DOL), ensuring that the audit is both objective and reliable.
While ensuring your Form 5500 filing is accurate, timely, and compliant is one clear benefit, there are several additional advantages to having an independent EBP audit performed:
- Transparency: Clear information is made available to participants, management, and regulators, helping assess the plan’s ability to pay future benefits.
- Accountability: Audits help plan administrators stay accountable to their responsibilities and regulatory requirements.
- Education: Audits often result in improved staff training and deeper knowledge of EBP-specific processes.
- Recommendations: Independent auditors can provide valuable suggestions to strengthen internal controls and enhance operational efficiency.
When selecting an EBP auditor, it’s critical to consider the level of knowledge and service offered. Vesta’s EBP audit team sets an example of what you should expect from a qualified provider:
- Deep knowledge of GAAP, DOL, IRS, and ERISA regulations
- Extensive experience working with benefit plans
- Use of current tools and industry resources to maintain audit quality
- Access to specialized consultation for complex or unusual issues
For more information to help you understand your options and requirements for auditing and reporting related to your EBPs, please reach out to the Vesta experts at any one of our Southeast Wisconsin offices: Fond du Lac, Sheboygan, North Shore, Madison.
