DOL limited-scope audits

Valuable Information on 401ks, Pensions, ESOPs, Form 5500 Preparation + More

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When you have a business that requires an audit of its 401k or retirement plan, the DOL and the IRS both accept what is known as a “DOL limited-scope audit”. But what does this mean and why would you want limited-scope audits instead of a normal audit?

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A DOL limited-scope audit contains the same procedures as a regular or full-scope audit, except for procedures surrounding the plan investments.  Such audits do not cover any information on plan investment assets and related transactions that are prepared and certified to as both complete and accurate by a qualified financial institution.  A limited-scope audit generally allows for lower audit fees due to the fewer areas being tested.  However, a limited scope audit can only be done if the Plan receives a certification letter from a qualified institution, stating that the investment information provided is complete and accurate. A qualified institution is either a bank or an insurance carrier that is acting as the trustee or custodian of the Plan assets. The institution must also be chartered and be regulated by state or federal agencies.

See: Full Scope vs. Limited-Scope Audits

For these DOL limited-scope audits an auditor will generally issue a disclaimer of opinion. A disclaimer of opinion simply states that the auditor was unable to come to an opinion of the financial statements due to the lack of testing over certain areas. This opinion is required to state the specifics of what was not tested and why. If the disclaimer of opinion only relates to the investments and the certification noted above, the audit will meet the annual audit requirements set forth by the DOL and IRS.

If you need an audit of your 401k plan talk to your CPA about the possibility of having a limited-scope audit performed. If you qualify, you may be able to save some money on audit fees. For more information on how Henry+Horne can help you with your audit, check out our Audit Services page.


Travis McGee