What is a 401(k) Plan Audit?

The primary goal of a plan audit is to examine  the processes used to prepare the plan’s financial statements. It is generally required for “large” plans (that is, plans with 100 or more participants), with limited exceptions. The independent qualified public accountant who performs the audit will prepare a written report that sets forth their findings and an opinion letter stating that the financial statements are free of material misstatement.   

Once your company engages an auditor, Guideline will work with your company to produce information requested by the auditor in the form of an “audit package.” Your company will also need to produce additional information requested by the auditor, such as bank statements, payroll records, and/or records from prior plan service providers, if applicable.

There are typically 2 focus areas in the audit.

  1. Plan Compliance: Documentation and evaluation of whether operational and fiduciary processes comply with  the plan documents.
  2. Financial Reporting: Verification that the plan’s financial reporting on the Form 5500 accurately reflects the activity in the plan and does not contain any material misstatements.

An audit report must be filed along with each annual Form 5500.

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