Employee benefit plan audits are designed to confirm that a plan is operating in accordance with its governing documents and applicable regulations. While every audit is unique, many findings tend to fall into a few recurring categories. These matters are typically operational in nature and, in many cases, can be mitigated through earlier review, clearer documentation, or stronger administrative processes.
This article outlines examples of common EBP audit findings and what they often signal about plan administration. Reviewing these patterns can help plan teams identify areas to review proactively, before audit testing begins.
Late Participant Contributions
What auditors observe
Employee deferrals deposited later than required after payroll processing.
What it often indicates
Delays are frequently tied to manual processes, staffing changes, or unclear remittance timelines rather than intentional noncompliance.
Why it matters
Late contributions may require corrective action and disclosure on Form 5500. Clear documentation of remittance timing and correction steps helps address audit and regulatory follow up.
Employee Eligibility Issues
What auditors see
Employees are enrolled in the plan before meeting eligibility requirements or remain excluded longer than permitted under the plan’s terms.
What it often indicates
Eligibility tracking issues often stem from misinterpretation of plan eligibility provisions, inconsistent tracking of service or hours, or gaps between HR systems and payroll.
Why it matters
Eligibility errors can result in operational corrections and highlight the need for better alignment between plan terms and day-to-day administrative practices.
Documentation Gaps
What auditors see
Missing or incomplete support for plan activities such as loans, hardship withdrawals, distributions, or employer contribution calculations.
What it often indicates
Documentation gaps commonly arise from informal processes, staff turnover, or reliance on service providers without centralized record retention.
Why it matters
Incomplete documentation can lead to additional audit requests and questions about oversight, even when transactions themselves are appropriate.
Differences Between Plan Terms and Operations
What auditors see
Plan documents that do not reflect how the plan is actually being administered.
What it often indicates
Over time, operational practices may change while formal amendments lag behind, especially when multiple providers are involved.
Why it matters
Misalignment between plan terms and operations may require corrective amendments or disclosures to bring the plan back into compliance.
Practical Steps to Reduce Repeat Issues
While not all findings can be eliminated, plan teams can reduce the likelihood of repeat issues by:
- Reviewing prior year audit findings and follow-up items
- Confirming eligibility and contribution rules across HR, payroll, and service providers
- Periodically validating participant and transaction data
- Ensuring documentation is retained consistently and centrally
- Discussing audit timing and expectations with the audit team early
These steps help surface issues earlier and support a smoother audit process.
Insights That Strengthen Plan Administration
Most EBP audit findings do not indicate significant compliance failures. More often, they reflect normal operational challenges, such as evolving processes, system changes, or gaps in documentation. Understanding these patterns helps plan teams identify where added clarity or consistency may be beneficial.
By focusing on insight rather than fault finding, plan sponsors can address issues earlier, strengthen administrative practices, and reduce the likelihood of repeat findings. This proactive approach supports smoother audits and greater confidence in plan operations.
How Duffy Kruspodin Supports EBP Audits
Duffy Kruspodin, LLP conducts ERISA audits with a focus on accuracy, consistency, and practical insight. We help plan teams understand common audit findings, strengthen documentation, and align plan operations with governing terms.
Questions about common EBP audit findings?
Connect with our EBP audit team to discuss audit preparation and common risk areas.
