We've talked about the quality of employee benefit plan audits (or, more accurately, the lack thereof) for years now. The situation isn't good, and the powers that be are paying attention.
No less an authority than Department of Labor Chief Accountant Ian Dingwall has chimed in time and again, pointing to a lack of documentation as the culprit in most deficient audits.
Marcus Aron has some thoughts of his own.
A senior auditor in the DOL's Office of the Chief Accountant, Aron keynoted the MACPA's 2012 Employee Benefit Plan Conference with a message: Effective audits are more than checklists.
The secret to a good employee benefit plan audit, Aron said, is to get beyond that checklist mentality and tell an actual story, to use the audit as an opportunity to paint a picture of what's happening inside the plan.
To paraphrase Aron's artistic analogy, too many EBP audits are stick figures. It's time to put some meat on their bones.
That's especially true at smaller firms. DOL inspections have found a high correlation between audit quality and the number of audits a firm conducts. In general, Aron says, firms that do the most audits have the fewest deficiencies.
The problem, he said, is that most plans are audited by small practices that do relatively few audits. The fewer audits a firm does, the greater the chance that deficiencies will arise.
So what should firms do to improve the quality of their plan audits? Aron offered these ideas:
Most importantly, avoid those checklists and stick figures. Paint a picture. Tell a story.
Download Aron's slides here, then tell us your thoughts for how to improve the quality of EBP audits.
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