Small and Privately Held Business Audits, Reviews, and Compilations

Protection of assets in employee retirement plans is a priority for the Department of Labor (DOL). They conducted a study of large plan audits in 2015 and concluded that approximately 40% of the audits reviewed had deficiencies. (A complete copy of the study can be found at www.dol.gov/ebsa.)

In an effort to combat the issues noted in their study, the DOL plans to send out emails to over 50,000 plan sponsors that have a large plan requiring an audit. (Plans that have over 100 eligible participants are typically subject to an audit. If you have questions about your plan, please do not hesitate to contact us.) In their email, the DOL provides guidance to Plan Sponsors when choosing a plan auditor.

We would like to address those items with you and express our commitment to perform a quality audit for your plan:

  1. The number of employee benefit plans the CPA audits and the types of plans audited: Sharrard, McGee & Company completed 32 audits of employee benefit plans for the 2014 calendar year. We audited a wide variety of plans from defined contribution, defined benefit, ESOP and health and welfare plans. We performed both limited scope audits and full scope audits for these clients.
  2. The extent of specific annual training the CPA received in auditing plans: Sharrard, McGee & Company understands that employee benefit plans are unique and have special requirements for auditing. Therefore, we currently have 9 staff members that specialize in ERISA audit work and all team members are required to obtain at least 8 hours of certified professional education specifically relating to employee benefit plan audits each year. We have one team member that attends the annual American Institute of Certified Public Accountants (AICPA) conference on employee benefit plans and is a member of the NCACPA Employee Benefit Plan Committee.
  3. The status of the CPA’s license with the applicable state board of accountancy. Sharrard, McGee & Company is licensed in North Carolina and is in good standing with our state board.
  4. Whether the CPA has been the subject of any prior DOL findings or referrals, or has been referred to a state board of accountancy or the AICPA for investigation. Sharrard, McGee & Company is proud to say that we have not been the subject of any DOL findings and have not been referred to a state board of accountancy or the AICPA.
  5. Whether or not your CPA’s employee benefit plan audit work has recently been reviewed by another CPA in the Peer Review process and, if so, whether such review resulted in negative findings. Sharrard, McGee & Company had our last peer review as of July 31, 2014. We have received only unqualified opinions, with no findings from our peer reviewers.

In addition to the items indicated by the DOL, we are also a member of the AICPA Employee Benefit Plan Audit Quality Center (EBPAQC). We have been a member since the center formed in 2004. Center members agree to be held to higher standards than other professionals. Center membership requires the following:

  • Designation of an audit partner to have firm-wide responsibility for the quality of the firm’s employee benefit plan practice. Connie Laster has been designated as that partner at Sharrard, McGee & Company.
  • Establish a program to ensure that all employee benefit plan audit engagement personnel possess current knowledge, appropriate to their level of involvement in the engagement. The engagement team personnel must complete at least 8 hours of employee benefit plan specific CPE every 3 years. (As stated above, our personnel receive 8 hours each year of employee benefit plan specific CPE.)
  • Designated partner must participate in an annual Center-sponsored Designated Partner planning webinar on recent developments in employee benefit plan auditing each year. Connie does participate in this annually. Many of our managers also participate in the webinars.
  • Establish and document policies and procedures specific to the firm’s employee benefit plan audit practice. We have these policies and procedures in place.
  • Establish an annual internal inspection of the employee benefit plan audits. Inspections are done every year. They are performed by directors or managers on the employee benefit plan audit team. The inspector must be someone that was not involved in the audit team for the client chosen for inspection.
  • Make publically available information about the most recent peer review. As stated earlier, our most recent peer review report is enclosed with this letter.
  • Include an employee benefit plan audit in the firm’s peer review. We did include an employee benefit plan audit in the most recent peer review.
  • File all necessary documents with the Center as needed. We have complied each year with the EBPAQC documentation requests.

Sharrard, McGee & Company is committed to providing quality audits to all of clients, including our employee benefit plan audit clients. If you would like to discuss the information contained in this letter further, or have questions concerning the DOL audit quality study, please do not hesitate to contact us.

Days until April 17

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© Sharrard, McGee & Co, PA 2019,
1321 Long Street, High Point, NC 27262
(336) 884-0410

800 Green Valley Road, Suite 200, Greensboro, NC 27408
(336) 272-9777

E: info@smccpa.com

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