Selecting an Employee Benefit Plan Auditor: Considerations and a Request for Proposal (RFP) Checklist

Posted by Aaron Juckett, CPA, CPC, QPA, QKA on Fri, May 02, 2008
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Generally, a qualified retirement plan is required to be audited if there are 100 or more participants as of the first day of the plan year. In addition to the legal requirement, the audit also helps protect the assets of the plan and helps ensure that a complete and accurate IRS Form 5500 is filed.

The selection of the independent auditor is one of the most important responsibilities of the plan administrator. Selecting An Auditor For Your Employee Benefit Plan, an informative article by the DOL, and How not to hire an auditor for your ERISA plan discuss factors to consider when hiring an auditor for your qualified retirement plan:

  • Don't automatically use your corporate auditor.

  • Make sure that your auditor is truly independent, both in fact and appearance. They should not have any financial interests in the plan or the plan sponsor that would affect their ability to render an opinion. Financial interests may include other work performed by the firm.

  • Consider going through a competitive bidding selection process. Some factors to consider include: cost, employee benefit plan audit experience (both firm experience and the experience of the audit team assigned to your plan), training and continuing education, and audit team turnover.

An effective way to go through a competitive bidding selection process is by utilizing a Request for Proposal (RFP). Obtaining Quality Employee Benefit Plan Audit Services—The Request for Proposal is a checklist for plan sponsors and administrators to use to develop a RFP:

  • Provide a brief description of the engagement.

  • Describe the plan, parties involved and where records are kept.

  • Explain the scope and any special considerations.

  • Ask candidate firms to provide a profile.

  • Request a listing of key personnel and their qualifications.

  • Ask firms to describe their audit approach, fees and scheduling.

Aaron Juckett, CPA, CPC, QPA, QKA
Written by Aaron Juckett, CPA, CPC, QPA, QKA

Aaron is President and Founder of ESOP Partners and provides implementation, administration, and consulting services to hundreds of companies. He is a member of The ESOP Association (TEA) and the National Center for Employee Ownership (NCEO).

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