The ERISA Audit: Your Fiduciary Responsibilities and Other - PowerPoint PPT Presentation

The ERISA Audit: Your Fiduciary Responsibilities and Other Considerations Lara E. Fuller, CPA Audit Senior Manager

AGENDA • Understanding your responsibilities • Communication • Understanding common errors

YOUR RESPONSIBILITIES • The Plan Sponsor is a primary fiduciary of the plan – Perform duties solely in the interest of the plan participants – Cannot remove yourself even if outsourcing plan components – Compliance responsibilities • Audit • 5500

YOUR RESPONSIBILITIES Best Practices ‐ General • – Use direct corporate trustee (not an individual name) – Create a formalize committee for plan oversight – Obtain fiduciary liability insurance (not the same as required ERISA bond insurance) – Create and follow an investment policy – Required to receive full and detailed disclosure of all fees – Use professionally constructed and managed investment portfolios – Deliver and document employee education programs

YOUR RESPONSIBILITIES • Best Practices – Financial Reporting – Ensuring controls are in place and working • Preventative • Detective • SSAE 16 user controls – Accounting policies – Investment valuation • Responsibility cannot be outsourced – Actuary reports – Financial statement preparation – Plan expenses

YOUR RESPONSIBILITIES • Best Practices ‐ Compliance – Plan audit • Deficient audit can lead to DOL/IRS fines on plan sponsor – 5500 preparation • Ensuring all compliance testing is complete/accurate and corrected when necessary

COMMUNICATION • Communicate early and often • Who should you communicate with? – Auditors – Third ‐ Party Administrators – Actuary – Legal

AUDITORS Request a list of items the auditors are going to need • Review the list with your auditors • Assign dates as to when the auditors will need the information • Confirm certification and SSAE 16 report availability • Discuss any amendments to the plan • Request daily/weekly status reports or meetings • Stay in communication with the auditors after fieldwork and before issuance •

THIRD ‐ PARTY ADMINISTRATORS • Investment providers and/or record ‐ keepers • Verify if and when certification and SSAE 16 reports are available • Discuss with them when other information will be available – Plan reports – Participant reports – Discrimination testing – Form 5500 • Discuss how information will be distributed – To you, to the auditors directly, website?

ACTUARY • For defined benefit plans • For some health and welfare plans • Discuss when the reports will be available • Is the information as of the beginning or end of the year?

COMMON ERRORS – Failure to amend plan for tax changes – Compensation • Not following the definition in the plan document – Eligibility • Improper inclusion and/or exclusion – Vesting – Participant elections • Error in setup • Failure to restart contributions when limits met in prior year – Timely remittance of contributions

COMMON ERRORS – Loans • Stopping payroll deductions • Not paying off loan in 5 ‐ year required payoff – Hardship withdrawals • Only for certain situations • Not stopping contributions for 6 months • Not restarting contributions after 6 months – Discrimination testing • Not correcting any failures • Not performing all required tests

CORRECTION OPTIONS • Self ‐ correction – Plan sponsor corrects on its own – No approval or guarantee from IRS – Use for insignificant and recent failures • Voluntary Correction Program – Plan sponsor corrects on its own – Obtains approval from the IRS • Audit Closing Agreement – Plan sponsor is forced to correct as a result of an IRS exam

SUMMARY • Know your responsibilities – Avoid issues • Communicate early – Know what to expect – Timing • Be aware of the common errors – To keep from having them – To be able to correct them quickly and appropriately

QUESTIONS