What Are the Most Common Errors Found in Plan Audits?

A recent conversation between Trucker Huss’ Callan Carter and Diane Wasser of the CPA firm EisnerAmber LLC spotlights errors commonly found in a retirement plan audit.

An auditor tests a sample of an employer’s employee population when reviewing a plan. Wasser says, and once he or she discovers an error they must determine how to respond — which can include testing a larger sample or seeking additional information.

Some errors are more widespread than others, Wasser says. These include:

• using incorrect compensation in calculating employer and employee contributions;

• improperly applying eligibility provisions; and

• improperly conducting nondiscrimination testing.

There are ways to head off errors, says Wasser. Among them:

• have a highly qualified plan auditor, a knowledgeable plan recordkeeper and an ERISA counsel;

• take the fiduciary role seriously;

• review the plan before the review process starts;

• actively read the plan document and amendments;

• compare the plan document and amendments to the way the plan is run; and

• consult with qualified professionals to correct any errors discovered as soon as possible.