Credit Unions are by nature, member centric and community focused. The “People Helping People,” ethos typically extends to employees, reflected in the competitive benefit packages many offer. They attract qualified people and are an added incentive to stick around. A crucial aspect for ensuring financial institutions run effectively, as well as transparently, is the Employee Benefit Plan (EBP) audit. In the permanently evolving regulatory landscape, there are potential landmines involving EBPs. SingerLewak’s Credit Union Services Group can help you safely navigate the field.
As you would expect, the audit process is influenced the most by your audit team’s experience and expertise. Sheila Balzer, a partner and credit union expert with SingerLewak, says, “Too many companies engage auditors who don’t have an in-depth understanding of plan provisions, or compliance.” That can result in difficult, time consuming audits, or audits with deficiencies. “An interesting figure is that 30% of EBPs were exposed as having one or more major deficiencies. That’s what a Department of Labor study found earlier this year,” Sheila states. “Three out of ten doesn’t sound so awful but they only looked at about three hundred plans,” Sheila explains, adding “if you applied that percentage to all credit unions in the country, there could be more than 1,400 in a worrisome situation.”
If a plan has 100 or more employees/former employees with account balances, it is required to attach audited statements to the plan’s annual Form 5500 filing. The Department of Labor focuses on ensuring EBPs comply with the Employee Retirement Income Security Act (ERISA). Being prepared for a DOL review is crucial. Problems can result in penalties, litigation and fees.
Sheila points out that in the DOL study referenced, there’s a significant discovery. “The study found that firms performing five specialized EBP audits or less per year, had significantly more deficiencies than those who performed more than five.”
As with all types of audits, you want to partner with a pro, an experienced firm that not only comprehends the complexities but can take the time necessary to give your plan the comprehensive review it needs.
A consultation with a SingerLewak representative can be requested by completing the form on the right.