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Department of Labor to Conduct Audit Quality Study

By: Jared Rosen

The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) is responsible for ensuring that the independent audits of employee benefit plans are being performed in accordance with auditing standards and regulatory requirements.  In order to assess the overall quality of employee benefit plan audits the DOL will be reviewing a statistically selected sample of 400 audits performed during the 2011 filing year.  The audits will be reviewed for compliance with professional standards and reporting and disclosure requirements.  The sample will be stratified based upon the number of plan audits performed by each audit firm.  Based on the population it is expected that almost half of the audits selected will have been performed by audit firms that do less than 5 plan audits per year.  Due to the specialized nature of these audits prior DOL inspections have indicated that these firms have a higher risk of deficient audits.

It is expected that the DOL will begin sending out letters to the sponsors of the selected plans this month.  Since the DOL does not have authority to oversee the Auditors of the plan they will be requesting that the plan sponsor direct the plan auditor to send copies of the audit workpapers to the offices of the DOL.  The letters will ask that the information be provided within 15 days.

If your plan audit is selected for review you should understand that this study is not related to a DOL investigation or enforcement effort.  You should communicate with the DOL promptly if you have any questions or if the 15 day deadline cannot be met.

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