What’s the Objective of the Audit?
• Annual audit is required by ERISA/plans subject to Title 1 of ERISA. • To express an opinion on whether the plan’s financial statements are presented fairly, in all material respects, and in conformity with U.S. generally accepted accounting principles. • The auditor is responsible to plan and perform the audit to obtain reasonable assurance that material misstatements are detected. • Reasonable assurance is high, but not absolute. • The audit is conducted in accordance with auditing standards generally accepted in the US (in addition to standards of the PCAOB for 11-K filings). • Generally accepted auditing standards require, among other things: • Proper planning and risk assessment • Understanding the design and implementation of internal control • Gathering of sufficient evidence • Documentation of findings When is an Audit Required? • ERISA generally requires audits for plans with an excess of 100 eligible participants at the beginning of a plan year. • Watch eligible in a 401(k)
