4 Things To Look For When Selecting A 401k Auditor

by | Feb 26, 2024

If your business has a 401(k) plan with 100 or more account balances at the beginning of a plan year, you are required to perform a 401(k) audit. The audit report must be finished and filed with the IRS by July 31. In other words, the clock is ticking!

Looking for an EBP Auditor? Here’s what’s important to consider.

The first step in the 401(k) audit process is to find a qualified, independent auditor. But not any CPA will do! Choosing the wrong auditor can have severe consequences for your company, your plan, and your plan’s participants. To help you in your search, PriceKubecka’s 401(k) audit team has compiled a list of criteria you should consider when selecting a 401(k) auditor.

Man working on phone

Experience & Expertise

Look for auditors with specific expertise in auditing employee benefit plans, particularly 401(k) plans. They should be familiar with the complexities and regulations governing these plans, such as the Employee Retirement Income Security Act (ERISA) and Department of Labor (DOL) requirements. Experienced auditors will have performed hundreds of 401(k) audits and therefore, have better knowledge of plan design and service provider nuances that are integral to the 401(k) audit.

In the Department of Labor’s most recent Audit Quality Study, firms with a higher volume of work on EBP audits produce better results. PriceKubecka performs more than 400 high caliber audits every year, placing us in the top 1% of CPA firms in the United States.

In addition to asking about quantity, also find out who’s working on all those audits. Many CPA firms use interns or inexperienced professionals to work on 401(k) audits, which makes those audits prone to errors and too many unnecessary questions. PriceKubecka employs licensed CPAs with substantial experience. Additionally, our work undergoes peer review through the AICPA, ensuring quality and accuracy.

Cost & Value

When evaluating potential auditors, consider the auditor’s fees in relation to the value they provide. While cost is a key factor, you should prioritize value and the quality of the audit services. A thorough and accurate audit can help prevent costly penalties and compliance issues in the long run.

But a thorough and accurate audit doesn’t also have to be expensive! Opting for a transparent, flat-fee pricing model ensures clarity regarding costs before the audit commences. For instance, by leveraging advanced technology, PriceKubecka can provide a high-quality flat-fee audit for $10,000 – a fraction of what an hourly-based audit would cost! PriceKubecka makes it easy for companies to know exactly how much their audit will cost.

Streamlined Process

As the saying goes, time is money. Look for auditors who minimize the time and effort required for the audit process.

Technology can have an enormous impact on the process of an audit. While most auditors use manual programs and require the client to perform all information gathering, PriceKubecka uses proprietary software that allows for a 100% remote audit experience.

Our powerful technology connects directly to your record keeper to gather data so there is no need for you to spend hours fielding questions and emailing documents. Moreover, technology paired with expert human resources ensures a high level of accuracy that you can trust.

Communication & Compatibility

Finally, choose an auditor who aligns with your company’s values, culture, and goals. A good fit in terms of communication style, responsiveness, approach to auditing, and understanding of your business can enhance the audit process and facilitate a productive working relationship.

Conclusions

Don’t take a chance on an inexperienced 401(k) auditor. Even if you already have a CPA for other financial matters, find an experienced 401(k) auditor so disruptions to your current workflow are minimized.

At PriceKubecka, it’s our mission to ensure clients have a better audit experience. CONTACT US  today to get your high-quality, low-cost audit started and finished well before the July 31 deadline.

Frequently Asked Questions

What should I do if I missed the October 15 Form 5500 deadline?

First, confirm that October 15 was actually your plan’s deadline and that a valid extension applied. If the deadline has passed, determine what is preventing the Form 5500 from being completed. If a required 401(k) audit is unfinished or hasn’t started, contact an experienced employee benefit plan auditor immediately and work with your other advisors to determine the appropriate filing and penalty-relief options.

Can you file Form 5500 after the deadline?

Yes. A delinquent Form 5500 can still be filed after its due date. Filing late does not eliminate the filing requirement, however, and potential DOL and IRS penalties may apply. Eligible plan administrators may be able to use the DOL’s Delinquent Filer Voluntary Compliance Program to reduce certain penalties.

What are the penalties for filing Form 5500 late?

The Department of Labor may assess substantial civil penalties for failure to file a complete and accurate Form 5500. Current Form 5500 instructions state a potential DOL penalty of up to $2,739 per day. The IRS can separately assess $250 per day, up to $150,000 per plan year, for certain late Form 5500-series filings. Actual penalties and available relief depend on the circumstances.

What is the DOL's Delinquent Filer Voluntary Compliance Program?

The DFVCP is a Department of Labor program that allows qualifying plan administrators to voluntarily submit delinquent Form 5500 filings and pay reduced civil penalties. Eligibility generally requires correcting the filing before the DOL has provided written notice of the failure to file.

What if my 401(k) audit hasn't started and the Form 5500 deadline has already passed?

If your plan is required to have an independent audit, missing the Form 5500 deadline does not remove that requirement. Contact an employee benefit plan auditor as soon as possible, explain that the filing is already late and determine what records are needed to begin the audit immediately. Work simultaneously with your TPA and other advisors to address the delinquent filing and determine whether penalty-relief options are available.

Related Articles