A CPA license is the starting point, not the whole test. Federal law requires an employee benefit plan auditor to be licensed or certified as a public accountant by a state regulatory authority. When choosing an auditor for your EBP, also weigh how much plan-specific work the auditor handles and how the firm supports audit quality.
When choosing an auditor for your EBP, credentials and fees are only part of the decision. An employee benefit plan audit involves specialized reporting and compliance requirements, so relevant experience, clear communication, and a well-defined engagement matter too.
This guide explains which qualifications to look for, how audit volume and peer reviews can inform your decision, and what to clarify about scope, timing, and fees before work begins. You’ll also learn how ERISA requirements shape an audit and when specialized plan-audit experience can make a meaningful difference.
Yes. Federal law requires an auditor engaged for an employee benefit plan audit to be licensed or certified as a public accountant by a state regulatory authority. This is the legal starting point, but it doesn’t by itself demonstrate experience with benefit plan accounting, reporting, or audits.
The auditor must also be independent, meaning able to assess the plan objectively without a conflict of interest. The auditor should have no financial interest in the plan or plan sponsor that could compromise an unbiased opinion. For example, a financial stake in the sponsor could affect how the auditor evaluates the plan’s records and financial statements.
In 2022, the Employee Benefits Security Administration updated its written explanation of auditor-independence rules as Interpretive Bulletin 2022-01. The bulletin addresses circumstances that can affect an auditor’s objectivity. In practice, consider both the auditor’s relationship with the plan and any financial interests involving the sponsor. A CPA license alone doesn’t resolve a conflict.
Independent audits matter because employee benefit plans manage participant accounts, contributions, and benefit payments. An objective review can help identify problems in financial information before it is reported. The Department of Labor advises sponsors that selecting a qualified CPA with the expertise to audit under professional standards is a critical responsibility for safeguarding plan assets and supporting ERISA reporting and fiduciary compliance.
Plan size also affects whether an audit is required. According to the U.S. Department of Labor, federal law generally requires employee benefit plans with 100 or more participants to undergo an audit as part of the annual Form 5500 series filing. Form 5500 is the annual report plans file with the government. Some U.S. pension plans with fewer than 100 participants may still need an annual audit if they don’t meet certain conditions involving investments, bonding, and disclosure.
Participant counting can change the result. For plan years beginning on or after January 1, 2023, participants with an account balance count toward the large-plan threshold, even if they aren’t actively deferring. A former employee with money remaining in an account may therefore affect the count. Use the plan’s participant records and the applicable counting approach to determine the filing category and audit requirement.
Plans below the threshold shouldn’t assume they’re automatically exempt. Investment arrangements, bonding, and disclosures can matter, while the participant count helps determine how the threshold applies. The administrator should establish the filing category from plan records and arrange an independent audit when required.
Assess credentials, objectivity, and benefit plan experience separately. A state-issued CPA qualification addresses licensing, a conflict assessment addresses impartiality, and employee benefit plan knowledge supports relevant audit work. Together, these checks help sponsors select an auditor suited to the plan’s reporting responsibilities.
Yes. Employee benefit plans have specialized accounting and reporting requirements, so relevant audit experience matters. Audit-quality findings also make it useful to consider a firm’s plan audit volume, training, and familiarity with your plan type.
Audit volume indicates how regularly a firm handles employee benefit plan audits, while experience reflects its familiarity with plan-specific work. Both help you assess whether these audits are a meaningful part of the firm’s practice.
In its review of 307 audits from the 2020 Form 5500 filing year, the Department of Labor found that 30% had one or more deficiencies. The Department also found fewer deficiencies among firms performing 25 or more plan audits annually than among firms performing only a few. Firms performing 1-2 audits annually had a 70% deficiency rate, compared with 17% for firms performing 100 or more. These findings offer context, not a substitute for assessing the team assigned to your plan.
An EBP auditor should have specialized training and knowledge of employee benefit plan audits. That preparation matters because plan reporting has requirements that differ from a standard business audit.
The AICPA Employee Benefit Plan Audit Quality Center offers one indicator of a firm’s commitment to this work. Its membership requirements include at least 8 hours of EBP-specific continuing professional education within the three-year period before signing or managing an ERISA audit. Ask which team members will lead and perform your work, and how their training relates to your plan’s needs.
Specialized EBP expertise means understanding how a plan’s operations, participant records, and reporting needs shape audit procedures. It matters because experience with one plan type may not fully prepare an auditor for another.
To assess fit, ask about work with plans like yours and request references from other employee benefit plan clients. If your plan uses an ERISA Section 103(a)(3)(C) audit, ask how the auditor reviews the certification provided for investment information and the procedures related to it. This helps clarify whether the team understands the specific audit approach your plan uses.
An auditor without relevant plan experience may overlook issues or fail to identify compliance violations, resulting in deficient audit work. That can leave the plan administrator with problems to address and participants relying on reporting that may not reflect important findings.
Clarify who reviews the team’s work and handles complex procedures. If less experienced staff perform routine tasks, ask how an experienced plan auditor oversees their work and takes responsibility for complicated areas. This makes the staffing approach clear and helps you judge whether the team’s skills suit the plan.
For a focused discussion about your plan’s audit needs, connect with an EBP audit professional.
For a plan sponsor, the audit connects financial reporting with the responsibility to file accurate information. According to the U.S. Department of Labor, federal law generally requires employee benefit plans with 100 or more participants to undergo an audit as part of the annual Form 5500 series filing.
The participant threshold is only one part of the filing decision. Plan administrators should also establish the plan’s filing category and whether its circumstances trigger an audit. Some plans with fewer than 100 participants may still need an annual audit if conditions involving investments, bonding, and disclosure aren’t satisfied. Reliable participant counts and complete records help clarify the obligation.
Timing matters, too. According to the U.S. Department of Labor, Form 5500 is generally due seven months after the close of the plan year, with a Form 5558 extension of two and a half months. Build the audit schedule around the filing deadline, allowing time to assemble records, resolve questions, and complete the report before submission.
An audit’s scope affects the work required and, therefore, the fee. Factors include the plan’s records, transactions, investments, service-provider arrangements, and testing complexity. Rather than comparing fees alone, assess which procedures are covered, who performs them, and how the auditor will address issues discovered during fieldwork. A clear scope makes proposals easier to evaluate.
Compliance findings can require follow-up, not simply a note in the audit report. The Employee Benefits Security Administration can assess penalties of up to $2,586 per day, without limit, against plan administrators for deficient filings. This underscores why administrators should treat an incomplete, inadequate, or late report as a serious concern and coordinate promptly with the auditor.
For example, a mid-sized company might have finance staff maintaining payroll and contribution records, while a recordkeeper holds participant account details. The plan administrator can assign an internal contact to coordinate each set of records, track what has been provided, and route auditor questions to the right person. This clarifies responsibilities and helps the audit team follow information between systems.
Corrections depend on the type of finding. An error in contribution records calls for tracing amounts to supporting records, while a reporting inconsistency requires reconciling the filing with the plan’s financial information. The auditor can explain how each issue affects audit work and reporting. Keep a record of the finding, its resolution, and any related changes to filing materials.
For mid-sized plans, assign ownership early: the administrator coordinates records and filing decisions, while the auditor conducts the agreed audit work and communicates findings. A written calendar tied to the plan year, filing deadline, and internal record-collection milestones helps finance staff and outside service providers stay aligned.
Clear communication and a written agreement help the plan administrator understand what the audit covers, when work will happen, and what the plan must provide. Use the proposal and engagement letter to compare equivalent scopes, not just fees.
An audit fee reflects the work needed for the employee benefit plan’s records, transactions, and reporting, so it matters to compare services as well as cost. The price depends on the case and is given after a quote request; factors include plan complexity, record quality, investment arrangements, and the audit procedures required.
Ask the firm to explain how those factors shape the proposed fee. For example, incomplete participant records may require additional follow-up, while complex service-provider arrangements can affect the audit work. A useful proposal distinguishes included work from additional procedures that could be needed if new issues arise.
Fee discussions should also clarify billing and communication if the scope changes. The plan administrator can ask how the auditor will explain additional work, obtain approval, and document any effect on timing. This gives the sponsor a basis for managing the audit budget without reducing procedures that support a quality audit.
Engagement scope defines the audit work, timing, fees, and responsibilities of the auditor and plan administrator. It matters because a written scope turns general expectations into a shared plan for the engagement.
Review the engagement letter for the period covered, the records the auditor expects, and the work the firm will perform. The administrator’s responsibilities generally include maintaining plan records and arranging access to records held by third-party service providers. Naming these responsibilities helps prevent delays when records are outside the sponsor’s systems.
Use the letter to identify the engagement lead, main contacts, and how questions or findings will be communicated. For instance, agree on how the auditor will raise a missing record or possible reporting issue, and who at the plan sponsor will respond. This creates a clear route for decisions instead of leaving questions unresolved during fieldwork.
Before signing, confirm that the timeline aligns with the plan’s filing calendar and internal record preparation. The Department of Labor’s selecting-an-auditor guidance emphasizes the sponsor’s responsibility in choosing a qualified auditor. A clear agreement supports that responsibility by recording the expected work and each party’s role.
Communication should continue throughout the engagement, not stop after the letter is signed. Set a regular check-in to review status, open requests, and emerging issues. If the auditor identifies a matter requiring additional procedures, the administrator can discuss the reason, scope, and timing before the work proceeds.
Look beyond a firm’s stated expertise: assess its plan audit experience, quality controls, and team. To compare a CPA firm’s approach, staffing, and technology, ask who will perform and review the work, how the audit follows applicable standards, and how tools support records and communication.
Audit volume shows how regularly a firm performs benefit plan audits, while specialization reflects its familiarity with plan-specific requirements. Both matter because recurring work can build practical knowledge, but volume alone doesn’t establish quality.
The Department of Labor found fewer deficiencies among firms performing 25 or more employee benefit plan audits than among firms performing only a few annually. Use that finding as context, then discuss the firm’s experience with your plan type, its service-provider arrangements, and the procedures it uses for areas relevant to your plan.
A firm’s workload should also suit your engagement. Ask how it assigns staff during busy filing periods and who is responsible for keeping your audit moving. For a mid-sized plan, a consistent team can help preserve context across requests and follow-up.
Comparing audit practices means understanding how each firm plans, performs, reviews, and documents its work. The process and oversight shape how the team responds to plan-specific records and questions.
Ask the CPA firm to describe its approach to risk assessment, service-provider information, and audit review. Confirm which team members perform key procedures, who supervises them, and how an experienced auditor reviews complex areas. Then discuss how technology supports document exchange, request tracking, and communication about open items.
Tools should support the audit process, not replace professional judgment. Ask for a practical example, such as how the team tracks a missing record from a third-party service provider and communicates its effect on the audit. The answer should clarify responsibilities, review points, and how questions reach the engagement lead.
Peer review offers another quality signal. AICPA members receive a peer review every three years, and plan sponsors can request a firm’s latest peer review report. Consider the report’s findings and the firm’s response as part of a broader assessment, rather than treating peer review as a standalone guarantee of audit quality.
The AICPA Employee Benefit Plan Audit Quality Center maintains a directory of auditors who have agreed to experience, training, and practice-monitoring requirements. Membership is voluntary and involves more rigorous training programs and quality-control processes. It can indicate a firm’s commitment, alongside relevant plan experience and a clear explanation of its audit methods.
For a focused discussion of your plan’s audit approach and team, connect with an EBP audit professional.
SD Mayer provides agreed-upon audit procedures and employee benefit plan audits to address different needs. If your plan requires an audit, an employee benefit plan audit is the relevant service. Agreed-upon procedures can support a specific review where defined procedures and findings are needed. Clarifying the purpose helps align the engagement with your reporting and oversight priorities.
For mid-sized organizations, SD Mayer can also connect audit needs with Client Accounting & Advisory Services (CAAS) or Outsourced CFO/Controllers when broader accounting support is relevant. Share your plan’s reporting needs, current records, and key timing considerations to begin a focused discussion about the appropriate work.
Contact SD Mayer to discuss your employee benefit plan audit or agreed-upon procedures.
Choosing an auditor for your EBP is also an opportunity to strengthen how your organization prepares for future reporting. Use the selection process to clarify who owns plan records, how audit questions will be handled, and how findings can inform improvements to internal processes. A well-matched audit relationship can support steady financial oversight, not just satisfy a filing requirement.
SD Mayer supports organizations with employee benefit plan audits and related financial needs. Depending on your broader requirements, the firm also offers Client Accounting & Advisory Services (CAAS), Outsourced CFO/Controllers, and Single audits. These capabilities can connect audit work with the financial processes that support your organization.
When you’re ready to discuss your plan’s audit needs and next steps, talk with SD Mayer about your EBP audit. A clear conversation can help you move forward with greater confidence.
Sometimes, but only when the plan’s circumstances support a limited-scope audit. A plan administrator may limit an audit when plan assets are held by banks or insurance companies and those institutions provide written certifications. For example, a certification can affect the auditor’s work on certified investment information. The administrator and auditor should determine how the certification applies and document the resulting audit scope.
Yes. Confirm that the CPA is licensed or certified by a state regulatory authority, and request references from employee benefit plan clients with similar plans. A reference conversation can clarify how the auditor handled records, communication, and follow-up. You can also ask the firm about Department of Labor, IRS, or peer review findings and request its latest peer review report to understand its quality-control record.
Ask who will lead the engagement, how the team handles plan-specific questions, and how it reports issues that could affect the filing. If your plan uses a bank or insurer certification, ask how that document affects audit procedures. You can also ask how the auditor coordinates with a recordkeeper when information is held outside the sponsor’s systems, and what the administrator should expect during fieldwork.
The auditor’s work informs the plan’s financial reporting and can help identify errors or compliance concerns before filing. For example, an audit may examine whether contributions were received on time or benefit payments followed plan terms. An auditor unfamiliar with employee benefit plans may overlook relevant issues. Choosing an auditor for your EBP therefore affects the audit’s usefulness, not just completion of a filing requirement.
Yes. The plan administrator generally maintains the plan’s financial and other records and arranges access to records held by third-party service providers. That can include coordinating access to information from a recordkeeper or custodian. Before fieldwork, organize the records requested by the auditor and identify who can answer questions about them. Clear ownership helps the audit team trace transactions to supporting information.
Ask how much of the firm’s work involves plans like yours, who will perform and review your audit, and how it handles complex findings. Request an example of how the team approaches service-provider information or an ERISA Section 103(a)(3)(C) audit, if relevant. When evaluating potential partners, also discuss how the team will coordinate records and communication efficiently with your organization.
Fees differ based on the work required, so compare proposals by scope rather than quoted amount alone. Relevant factors include plan complexity, the condition of its records, investment arrangements, service-provider information, and required procedures. For example, records that need extensive reconciliation may change the work involved. Ask each firm to explain what its proposed fee covers and how it will communicate scope changes.
The engagement letter should describe the audit work, timing, fees, and responsibilities of both the auditor and plan administrator. Review it for clarity about the records the plan must provide, how the auditor will communicate questions, and how changes in scope will be handled. For example, the letter should make clear who coordinates access to records held by a third-party service provider and who receives audit findings.