With changes in operational practices and the ever-evolving shift to a more virtual work environment for many companies, the preparation for an upcoming EBP engagement is one of many areas of financial reporting and compliance will be impacted.
Virtual Audits as the “New Normal”
Withstanding the coronavirus pandemic, many companies had already begun the shift to a more virtual work environment. We have been performing a number of our many employee benefit plans audits remotely in recent years. We have successfully offered a virtual audit for several years and have developed procedures and processes to be successful in performing remote audits:
- Additional investment in the latest technology to meet our clients’ virtual needs has never been more relevant than during a pandemic.
- Clients can expect the same level of service and value that we provide during an onsite/in-office audit. Virtual audits, ideal during a pandemic, are most successful when both a client and the audit team effectively communicate. For the audit to move forward efficiently and effectively as possible, it is important that there is no breakdown in communication.
Auditors of employee benefit plans review internal controls as a basis for their audit planning. Any significant deficiencies or material weaknesses are communicated to those charged with governance of the plan. So, you receive feedback on internal controls if deficiencies are noted. Additionally, the benefit plan audit provides an independent assessment of your plan’s financial statements. This provides comfort to your plan participants.
As Plan Sponsors move forward with their yearly employee benefit plan audit, they will want to assess the auditors based on expertise. Notice what types of training they have received on updates and changes to EBPs. Qualified firms are staying up to date and training their staff in these areas.
2021 Audit Changes
For plan years ending in 2021, you can expect some changes to employee benefit plans, as amended with the passage of the SECURE Act and the CARES Act, in December 2019 and March 2020, respectively.
Three major changes occurred for EBPs, as passed in the CARES Act on March 27, 2020:
- No early withdrawal penalty
- Larger loans available
- Required minimum distributions