Categories: 401k Audits

Preparing Your Benefit Plan Request for Proposal

Companies that offer a retirement plan including defined benefit and contribution plans may be required by the Employment Retirement Income Security Act (ERISA) to perform an annual audit of the plan. While small plans are exempt from this requirement, generally speaking, plans with over 120 total participants throughout the year are required to have an audit completed. The requirements for conducting the audit are clear, but the key issues and questions to consider when hiring a benefit plan auditor are not. There are literally hundreds of firms in the marketplace that can conduct such an audit and unfortunately, they do so with varying degrees of proficiency as not every provider has the same level of skill and efficiency that’s needed. When the time comes to identify an auditor, it’s important to create and issue a comprehensive Request for Proposal (RFP). This will ensure your company gets the information needed to make an informed decision. To help identify the components of a comprehensive RFP, Wilson Lewis has provided a summary of key information below.

Key RFP Elements

  • Introduction – The purpose of this section is to provide general information to proposing firms about the nature and scope of the work that needs to be performed. It should also discuss the length of time the contract will cover along with renewal options. Be sure to provide an overview of how the RFP is structured and call attention to any key details that the responding firm should focus on. When appropriate, offer copies of past Form 5500 filings and other relevant information needed to understand the engagement requirements. Finally, be sure to provide information on the contact person, details and submission format, as well as the due date.
  • Administrative Information – It’s important to include relevant plan information including the type of plan, plan year-end, size of plan (participants and assets), custodian, investment manager, third party administrator and any trust arrangement. Please be sure to provide information on who prepared the Form 5500, Summary Annual Report and office locations covered by the plan. It’s also important to discuss the expected due dates of when each service rendered needs to be completed. Also indicate how you would like proposing firms to bid including flat fee, flat fee plus expenses, or hourly plus expenses. Whatever format is best for your company should be indicated in this section.
  • Engagement Scope Details – Use this section to provide very detailed information about the scope of the engagement including the number of years covered by the proposal. Be sure to identify if it’s a limited or full scope audit, type of investments held by the plan, whether any work will be performed by the internal audit function as well as if any other services such as the preparation for Form 5500 will needed. Be sure to include if the auditor’s report will be part of an 11-K filing with the SEC. This section is also where you should include a description of significant plan changes or other issues that have not yet been discussed in the RFP.
  • Essential Questions – Use this section to ask questions that the company feels are essential when selecting a plan auditor. While each company will likely have its own list of questions, some ideas to consider include the following:
    • Current number of plan audit clients,
    • Number of clients with similar plan types,
    • References,
    • Current litigation,
    • Copy of the latest Peer Review Report (along with responses),
    • Working paper retention and access policy.

Be sure to identify the partner in charge of the audit (and the plan audit practice), hours of relevant training, and expected levels of staffing and supervision through the engagement.

  • Attachments – As mentioned in the introduction section, be sure to provide copies of relevant documentation for proposing firms to review. This can include copies of the last audited financial statement (including auditors report), Form 5500 and Summary Plan Description.

Contact Us

A comprehensive RFP is essential to helping your company find the best fit for its plan audit needs. The more information provided, and questions asked, the easier it will be to manage the process. If you have questions about preparing a benefit plan audit RFP or need assistance with your next plan audit, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.

Erin Carter

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Erin Carter

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