For large plans, a plan audit can be a complex and time-consuming process that may require plan sponsors to provide documents, schedules and information to their plan auditor. In addition, plan auditors may ask questions related to a range of topics, including plan reporting, governance, service providers, internal controls and fraud.
That's why it's critical that you work closely with your plan auditor and your local Mutual of America representative throughout the audit process. You should also ensure that plan officials are sufficiently bonded.
To help you begin preparing for a Form 5500 Annual Return/Report Independent Audit, here are three important points to consider:
1. Start Early—Gather all the required data and information, including:
2. Prepare Yourself—Some of the key questions your auditor might ask are:
3. Be Protected—ERISA requires plan fiduciaries and any other person who handles plan assets to obtain and maintain a bond to provide protection to the plan against loss by reason of acts of fraud or dishonesty. The persons to be bonded include those designated to have responsibility for the ultimate control, management or disposition of the plan assets, referred to in ERISA as "plan officials." In general, the amount of the bond must be at least 10% of the value of the plan assets held under the contract, but not less than $1,000 or more than $500,000.
*The audit report requirement generally applies to plans that cover 100 or more total participants at the beginning of the plan year (counting all employees who are eligible to contribute to the plan, whether they do so or not, and former employees and beneficiaries who have a balance under the plan).