When an employee benefits plan such as a 401(k) plan reaches a certain size or qualifies under other requirements, the Department of Labor requires an audit to be performed. If you are selecting an audit firm for your employee benefits plan, you might consider asking the following questions:
1. How many employee benefit plan audits does your firm perform?
As with all things, practice makes perfect. Employee benefits plan audits are very different than financial statement audits and the more experience the firm’s personnel has with them, the better your results will be.
2. Who will be working on my audit and what are their billing rates?
This will not only give you an idea of the cost per hour for each auditor working on the job, but also give you an idea of the level of expertise that will be assigned to your job.
3. How many hours will the audit take to perform?
A typical 401(k) audit performed by our firm or one of our affiliates may take 60 to 80 hours in total. If the total estimated hours are significantly less than this, you might want to understand where the savings are realized.
4. When will you complete my audit?
Nobody wants to be hustling around on October 15th to meet the deadline for filing with the IRS. Make sure that the firm you choose has the resources to complete the audit in a time frame that you find acceptable.
5. Will you perform the audit for a fixed fee or charge hourly?
If they do provide a fee estimate, understand if the fee estimate is fixed or if the firm will bill for the actual hours spent on the audit.
Remember that you are dealing with professionals who are bound by ethics codes to be honest and forthcoming with potential clients. If you ask the right questions you will find that most CPA’s will be very honest and helpful, even if it means pointing you in a different direction for help.
Rex Platt, CPA