As an HR professional, you are well aware of the meticulous attention required to adhere to state and federal labor laws, given their periodic alterations. Often, these modifications introduce new and occasionally more stringent requirements. However, a recent update in Department of Labor guidelines for ERISA plan audits might simplify compliance efforts.
What is an ERISA Audit?
ERISA, the Employee Retirement Income Security Act of 1974, overseen by the Department of Labor, sets standards for retirement and healthcare plans in the private sector to safeguard enrolled employees. Among its provisions is the mandate for covered plans to undergo an annual audit by an “independent qualified public accountant” to ensure compliance with minimum standards, preventing fraud or law abuse.
How Has ERISA Compliance Changed?
The recent DOL announcement primarily affects the definition of “independent qualified public accountant.” Notable changes include adjustments in timing criteria and terminology. Under the modified rules, an accountant is disqualified only if financial interests overlap with the “period of professional engagement” during the audit, broadening the scope for auditors with prior financial connections. Additionally, the definition of “office” has been updated to accommodate the modern work landscape, considering any “reasonably distinct subgroup” within a firm as an office, regardless of physical location.
How These Changes Affect Employers
These changes aim to promote auditor independence while eliminating outdated barriers, ensuring access to highly qualified auditors. Essentially, the DOL seeks to align ERISA audit guidelines with the fair and relevant needs of contemporary businesses. Consequently, organizations may now have a more extensive selection of auditors while maintaining compliance, given the relaxed restrictions. However, caution is advised in auditor selection, as those with more ERISA audit experience are generally less prone to errors that can be both time-consuming and costly for plan sponsors.