It’s that time of the year when Plan Sponsors who are lucky enough to need an audit for their 401k plan should be sending out requests for proposals (RFP) to qualified CPA firms. I have some tips for not only Plan Sponsors who are going through this process for the first time, but also for Plan Sponsors who have undergone audits of their 401k plans for several years and need to re-evaluate their audit services.
Be sure to send your RFP to qualified CPA firms
401k plan and other retirement plan audits are a very specialist industry. Plan Sponsors will want to make sure they are sending their RFP to CPA firms who have a specialization in these types of audits. Questions the Plan Sponsor will want to include in their RFP about potential CPA firms should include the following:Â
–Â Â Â Â Â Â Â Â Â Is the CPA firm a member of the AICPA Employee Benefit Plan Audit Quality Center?
–Â Â Â Â Â Â Â Â Â How many 401k and retirement plan audits does the CPA firm perform?
–Â Â Â Â Â Â Â Â Â Ask to provide 3 – 5 references from current 401k audit clients.
–Â Â Â Â Â Â Â Â Â When, and what were the results of the CPA firm’s most recent Peer Review?
–Â Â Â Â Â Â Â Â Â Did the most recent Peer Review include a sample of 401k and retirement plan audits?
–         Has the CPA firm been subject to any DOL examinations and findings? Or any AICPA or state society ethics referrals?
–Â Â Â Â Â Â Â Â Â How does the CPA firm provide training to their staff on 401k audits?
Key information about your Plan to include in your RFP
Make sure you provide potential CPA firms with enough details and information about your Plan:
–         Provide a copy of the Plan’s most recently audited financial statements and Form 5500.
–Â Â Â Â Â Â Â Â Â Has the plan been audited in the past, or will this be the first time the plan has undergone an audit?
–Â Â Â Â Â Â Â Â Â Provide the following employee totals:
o Total overall employees at the Plan Sponsor
o  Total eligible employees
o  Total active employees in the Plan
–Â Â Â Â Â Â Â Â Â Projected growth or changes in employees over the years covered by the RFP.
–Â Â Â Â Â Â Â Â Â Who is the custodian of the investments?
–Â Â Â Â Â Â Â Â Â Who is the Third-Party Administrator (TPA)?
–Â Â Â Â Â Â Â Â Â Who is the Investment advisor?
–Â Â Â Â Â Â Â Â Â Who is the payroll provider for the Plan Sponsor?
–Â Â Â Â Â Â Â Â Â Any current or pending legal issues against the Plan?
–Â Â Â Â Â Â Â Â Â Any current or pending DOL or IRS exams or investigations?
–Â Â Â Â Â Â Â Â Â Potential logistics:
o  Does Plan sponsor want the audit team on-site, or perform a remote audit?
o  Potential timing, dates.
Key Information about the Plan’s operations to include in your RFP
Give potential CPA firms information about your Plan’s operations:
–Â Â Â Â Â Â Â Â Â Who are the key client personnel involved in the plan?
–Â Â Â Â Â Â Â Â Â What are the eligibility requirements to participate the Plan?
–Â Â Â Â Â Â Â Â Â What types of employer contributions does the Plan allow?
–Â Â Â Â Â Â Â Â Â Does the Plan allow loans?
–Â Â Â Â Â Â Â Â Â Is the Plan a Safe Harbor plan?
–Â Â Â Â Â Â Â Â Â What are the types of investments held by the Plan?
–         Are there any expected changes in the Plan during the years covered by the RFP?
o  Expected plan amendments?
o  Expected mergers or business combinations?
o  Expected freezing or termination of the Plan?
o  Expected changes in custodian or TPA?
o  Expected changes in operations of the Plan Sponsor that may impact Plan operations?
o  Other?
Key information to include in your RFP for what the CPA firms should include in their proposal
–Â Â Â Â Â Â Â Â Â Who should CPA firms address their proposal to at the Plan Sponsor?
–Â Â Â Â Â Â Â Â Â How many years to be covered by the proposal?
–Â Â Â Â Â Â Â Â Â Any additional services being requested besides the audit?
–Â Â Â Â Â Â Â Â Â Is the audit expected to be an ERISA 103a3c audit, or a full scope audit?
–Â Â Â Â Â Â Â Â Â If the audited financial statements will be included in an SEC Form 11-K filing?
–Â Â Â Â Â Â Â Â Â If the CPA firm is expected to attend meetings with plan trustees or committees?
–Â Â Â Â Â Â Â Â Â Due date for the proposal to be submitted to the Plan Sponsor.
–Â Â Â Â Â Â Â Â Â Who the CPA firm should contact at the Plan Sponsor with questions.
Good luck with those RFPs!
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