Form 5500 Requirements: What is the auditor’s responsibility?

Another requirement of Statement on Auditing Standards (SAS) No. 136 (see related article) is that auditors cannot release final financial statements until they have received and approved Form 5500. This raises the question: What is the auditor’s responsibility when it comes to reviewing Form 5500?

According to the Audit and Accounting Guide for Employee Benefit Plans published by the AICPA, auditors are required to look for material differences in the Form 5500.

Here are a few steps audit firms take when reviewing Forms 5500:

  • Reconcile the number of plan participants who have account balances at the end of the year to a report of participant account balances obtained from the third-party administrator (TPA).
  • Ensure all numbers on Schedule H agree in totality with the audited financial statements.
  • Verify the bond amount to ensure that insurance coverage is accurate and adequate.
  • Ensure that any supplementary schedules are accurate and match the audited financial statement disclosures. These may include the Schedule of Assets Held, Schedule of Delinquent Participant Contributions, and Schedule of Reportable Transactions.

When material differences are spotted, the auditor may ask the TPA to correct the Form 5500 and send the auditor a revised draft prior to release of the audited financial statements. If the TPA does not or will not correct it, the auditor may add a reconciling footnote to the audited financial statements (if the difference is on Schedule H only).

If the TPA is not available to make corrections, the auditor may choose to complete the Form 5500 and have the client file a corrected return.

Have questions about auditors’ Form 5500 responsibilities? We Can Help.

Holtzman’s team of Audit & Assurance professionals can help meet your employee benefit plan’s annual audit and filing requirements and work to protect the plan’s integrity. We are an AICPA Employee Benefit Plan Audit Quality Center Member that audits 100+ plans representing over 160,000 participants and plan assets over $4.3 billion. Our goal is to provide value throughout the employee benefit plan process, help to identify risk areas, and how to put best practices into place to support your business. Learn about our full suite of employee benefit plan services and get in touch today!

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