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How Do Fee Disclosure Regulations Impact Auditors?

ERISA §408(b)(2) provides many ways for Plan Sponsors to commit a prohibited transaction (“PT”). In the event a PT does occur, it is your duty, as an Auditor, to report them. Furthermore, it is your duty to notify management of any substantial risk of committing a PT. Thus, at a minimum, you must confirm that all fee disclosures have been made and that the Responsible Plan Fiduciary has formed “reasonable belief” disclosures are complete.

How are you forming reasonable belief disclosures are complete? Are you actually obtaining and reviewing notices? Are you qualified and experienced enough to do so? Are you just asking the Plan Sponsor to sign off on this question as part of your year-end questionnaire? In either case is this sufficient?

DOL consequences for deficient audit could include (1) expanded review of audit services to all ERISA plans, (2) rejection of Form 5500 filings, and (3) referral to AICPA professional ethics division and/or state regulators. Given the steep consequences for deficiencies, and recent DOL audit focus, you must be hyper-vigilante in obtaining assurances the plan is in compliance.

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