Kathleen M. Jackson, CPA Novak Francella LLC Bala Cynwyd, PA

Transcription

1 Kathleen M. Jackson, CPA Novak Francella LLC Bala Cynwyd, PA

2 Choosing A Quality Auditor DOL Audit Quality Initiative What to expect from your auditor? Key Policies Plan should have in writing Administrative Services Agreement Apprenticeship and Training Programs Trustee Expense Reimbursement 2

3 If your Plan has over 100 participants, you need an audit done by a quality auditor. A quality auditor should be a licensed Certified Public Accountant meeting requirements of a State regulatory authority. Your auditor should be experienced in auditing employee benefit plans. Your auditor should be a member of the AICPA Employee Benefit Plan Audit Quality Center. 3

4 The AICPA EBPAQC website lists member firms that are qualified to perform EBP audits. See Find a Member Firm Section at 4

5 The AICPA EBPAQC website lists member firms that are qualified to perform EBP audits. See Find a Member Firm Section at Be sure your auditor has issued a clean, unmodified opinion. Your auditor should request that the Plan s Trustee s sign an engagement letter fully describing the services to be provided as well as a management representation letter at the completion of the audit. 5

6 The more training an auditor has, the more familiar they are with the nuances of an EBP plan. Department of Labor states that most deficient audits are due to the failure of the auditor to perform tests in areas unique to employee benefit plan audits. 6

7 Deficiency rate - 32% ERISA Plan Audits - 82,579 Plan Audits 7,358 CPA firms performing the audits $6.3 trillion in plan assets subject to audit 50% of Plan Auditors audit 1 or 2 plans 1% of Plan Auditors audit 100 or more plans 7,268 CPA firms auditing less than 100 plans 7

8 There are 10,000 auditors performing 77,000 audits of employee benefit plans. Several audit firms do 1 2 audits while others perform 100 s of audits. The DOL has an Audit Quality Initiative in 2014 to audit the auditor to ensure that quality work is being performed by audit firms. 8

9 The Plan Sponsor may receive correspondence from the DOL stating that auditor workpapers must be submitted to DOL for review within 10 days. Over 250 Plans will be reviewed in 2014 by DOL. DOL is looking to ensure adequate work was done by auditor on alternative investments, payroll compliance reviews and benefits. 9

10 Financial conditions of Fund and trends Related party transactions Accrual basis financial statements Significant deficiencies or Material weaknesses in internal control structure SAS115 letter 10

11 Gives opinion as to whether the financial statements are presented fairly Reviews financial activities of the Plan to ensure they re in accordance with the Summary Plan Description and Amendments approved by the Trustees Prepares ERISA Reporting for Form 5500 Review and testing of internal control system Review and testing of trustee expenses Review of related party transactions and shared cost arrangements Perform payroll compliance reviews on contributing employers to ensure contributions are properly remitted to the Plan. 11

12 Auditing every transaction Reviewing 100% of disbursements made Monitoring other service providers and their contacts Running the Fund s accounting department Assisting with the administration of the Fund Filing of Annual 1099, W-2 s, W-4 s Filing of Summary Annual Reports to Participants 12

13 Quality Comparability of services provided Timely preparation of audit/filing of forms Payroll compliance reviews Management recommendation letters Employee Benefit Plan expertise Experience with other service providers 13

14 Key Policies Plans should consider having in writing and in place: Collection and Delinquency policy Investment policy Trustee and Employee Expense reimbursement policy Administrative Services Agreement policy Conflict of interest policy Records retention policy Disaster recovery policy 14

15 If you share administrative services with your Local Union, a written agreement is required between the related parties detailing: Costs to be shared must be pro rata Rational basis for allocation methods Records must be established and maintained to support Allocation Compensation for sharing goods, services, and space, must be reasonable. Annual review by the Board of Trustees should be performed. 15

16 DOL concerns regarding the programs Permitted Graduation Ceremonies Modest graduation ceremony with light refreshments Expense is modest in relation to plan assets Token awards/gifts for apprentices Not Permitted - Graduation Ceremonies Graduation dinner for all attendees Valet parking Payments for hotel accommodations for graduates or guests Open bar 16

17 Trustee and Employees Expenses Expenses must be necessary, reasonable and authorized No per diem for trustees Should have written expense reimbursement policy 17

18 Allowed Expenditures for Training Funds Outreach effort to support program T-shirts for apprentices Unallowed Expenditures for Training Funds Charitable contributions Tickets to sporting and entertainment events Golf outings and sponsorships Payment of Union-related expenses 18

19 It is almost certain that during a DOL audit, DOL will look at Trustee expenses in detail. Be sure to keep accurate records. Submit detailed credit card receipt with adequate documentation All receipts should be maintained and submitted for reimbursement. Plan should have a written Trustee Expense Reimbursement Policy 19

20 Document on back of receipt Who was in attendance, including business relationship of those persons involved What was the nature of the expense When the meeting was held Where the meeting was held Why the meeting was held, or the business purpose of the meeting 20

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22 Kathleen M. Jackson, CPA Partner Novak Francella LLC One Presidential Blvd, Suite 330 Bala Cynwyd, PA Office Cell Fax