How Audit Results Affect Your Filing under SAS 136

Form 5500 is a core compliance requirement for employee benefit plans and serves as a public snapshot of how a plan operates financially and administratively. For plans subject to an audit under ERISA, the information reported on Form 5500 must be consistent with the audited financial statements and the results of audit procedures performed in accordance with current professional standards.

Under Statement on Auditing Standards (SAS) No. 136, audits of ERISA‑covered employee benefit plans are performed either as:

• an ERISA Section 103(a)(3)(C) audit, or
• an ERISA plan audit that is not pursuant to Section 103(a)(3)(C).

The former replaces what was historically referred to as a “limited‑scope audit.” That terminology is no longer used.

Why Alignment Matters

For plans undergoing an ERISA audit, Form 5500 disclosures are closely tied to audited financial information and audit conclusions. Misalignment between the Form 5500 and the audited financial statements is a common reason plans receive follow‑up questions from the Department of Labor (DOL) or are required to file amended returns.

These issues are often not the result of errors, but rather timing gaps or a lack of coordination among plan sponsors, auditors, third‑party administrators (TPAs), recordkeepers, and custodians. Ensuring alignment between audit results and Form 5500 reporting helps reduce rework, delays, and regulatory scrutiny.

Understanding ERISA Section 103(a)(3)(C) Audits

When a plan sponsor elects an ERISA Section 103(a)(3)(C) audit, certain investment information prepared and certified by a qualified institution is not subject to traditional audit testing. However:

• The audit is not considered a scope limitation.
• The auditor issues an opinion on the financial statements.
• The auditor performs required procedures to:
  • Evaluate whether the certifying institution is qualified under DOL regulations.
  • Assess whether the certification meets ERISA requirements.
  • Compare certified investment information to the amounts presented and disclosed in the financial statements and ERISA‑required supplemental schedules.
• All non‑certified information—including contributions, benefit payments, participant data, and related disclosures—is fully audited.

Because of these requirements, the accuracy of information ultimately reported on Form 5500 remains critical.

Where Audit Results and Form 5500 Intersect

Several key areas of Form 5500 rely directly on audit‑supported information:

Plan Features and Operations

Form 5500 disclosures related to eligibility provisions, participant counts, plan operations, and service providers should reflect how the plan operates in practice. Auditors review plan documents, amendments, and operational data to assess consistency.

Financial Information

Amounts reported for contributions, distributions, assets, liabilities, and changes in net assets must align with the audited financial statements and supporting records, such as custodial reports and reconciliations.

Compliance Disclosures

Certain Form 5500 questions depend on audit procedures performed over payroll data, remittance timing, participant records, and plan operations. These include disclosures related to late contributions, participant loans, forfeitures, and prohibited transactions.

Fees and Expenses

Plan‑paid expenses and indirect compensation disclosures rely on accurate fee information and supporting documentation reviewed during the audit.

What Regulators Commonly Review

Regulatory reviews often focus on consistency, clarity, and support. Common areas of attention include:

• Differences between audited financial statements and amounts reported on Form 5500
• Compliance questions marked “Yes” without adequate explanation
• Late contribution disclosures that do not align with audit findings

Clear documentation and coordination among service providers help reduce the likelihood of follow‑up inquiries.

Timing Considerations

For calendar‑year plans, Form 5500 is generally due July 31, with an extension available to October 15 by filing Form 5558. While extensions are common, Form 5500 filings should not be finalized until audit procedures are substantially complete and audited amounts and disclosures have been reviewed.

Finalizing a filing before audit results are available increases the risk of amendments. Early coordination among plan sponsors, auditors, and service providers supports timely and accurate reporting.

Practical Steps to Reduce Issues

Plan sponsors can help reduce Form 5500 and audit‑related issues by:

• Finalizing year‑end census and payroll data early
• Confirming service provider roles and responsibilities
• Coordinating the timing of audit procedures and Form 5500 preparation
• Reviewing draft Form 5500 information for consistency with audited financial statements
• Ensuring fee disclosures and investment information are current and complete
• Checking prior‑year disclosures for consistency

A Coordinated Approach

Duffy Kruspodin, LLP supports employee benefit plan audits with a focus on accuracy, coordination, and clear communication. We work with plan sponsors and service providers to help ensure that audit‑supported information is appropriately reflected in Form 5500 filings and related disclosures, consistent with current ERISA and auditing standards.

Questions about Form 5500 and audit coordination? Connect with our EBP audit team to discuss timing, responsibilities, and review considerations.

General Disclosure: The information provided in this article is for general informational purposes only and does not constitute professional accounting, tax, or legal advice. Laws and regulations are subject to change and may vary based on specific facts or jurisdictions. Presentation of this information is not intended to create, and receipt does not constitute, an accountant-client relationship. Readers are advised not to act upon this information without seeking the services of a qualified professional.