Audit Communications and DOL Initiatives

Selecting a Plan Auditor & DOL Initiatives Brent Clark Audit Senior Manager, Pugh CPAs

Agenda Selecting an Auditor DOL Initiatives Limited Scope vs. Full Scope Audit Audit Communications

SELECTING AN AUDITOR FOR YOUR PLAN Deficient Audit Quality DOL update 5/5/2014

State of Tennessee SELECTING AN AUDITOR FOR YOUR PLAN # of Audits

Experience Matters SELECTING AN AUDITOR FOR YOUR PLAN 50% of Plan Auditors Audit 1 or 2 plans 6% of audited plans Covering 2 million participants 1% of Plan Auditors Audit 100 or more plans 42% of plans audited Covering 91 million participants

Who does the auditor work for anyway? SELECTING AN AUDITOR FOR YOUR PLAN The audit’s purpose: Protect plan participants and beneficiaries Fulfill the sponsor’s fiduciary obligations to the plan

Plan Sponsor Resource Center SELECTING AN AUDITOR FOR YOUR PLAN It is the plan administrator’s responsibility to ensure the plan obtains a quality audit in accordance with ERISA and the DOL. > Interest Areas > Employee Benefit Plan Audit Quality Center > Resources > Plan Sponsor Resource Center Solicit RFPs from Audit Quality Center members Obtain references and discuss the auditor’s work with other clients Verify the auditor’s license is valid and up-to-date.

Audit Quality Study DOL INITIATIVES Nationwide study of 400 plan audits covering 250 firms Still ongoing  October 2013-September 2014 Requests for workpapers are sent to the plan administrators Desk review is performed by the Office of the Chief Accountant

DOL INITIATIVES

Lost Participants DOL INITIATIVES According to the DOL the State of TN Unclaimed Property process should not be used for lost participant’s funds in active plans November 2013 ERISA Advisory Council Report recommends Development of industry best practices The DOL issue an update to FAB and address the fiduciary obligations to locate lost participants Further coordination with other government agencies

Late Deposits of Employee Contributions DOL INITIATIVES as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets, An employer is required to deposit employee contributions and participant loan payments as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer's general assets, but in no event no more than … (a) 90 days after the contributions are paid by employees or withheld from their wages for a welfare benefit plan or (b) the 15th business day following the end of the month in which amounts are contributed by employees or withheld from their wages for a pension benefit plan.

Small Employer Safe Harbor DOL INITIATIVES Small employer is eligible to file Schedule I or SF – not Schedule H Seven business days of payroll date Reasonable conclusion – contributions in excess of seven days are at risk of challenge by the DOL