403(b) Plan Annual Audits: Identifying Costly Reporting Errors, Evaluating Alternative Solutions

Auditing and administering 403b plans requires audit professionals and plan sponsors to stay on top of myriad and ever changing IRS and DOL rules and regulations. Any 403b plan qualifying as an ERISA plan with more than 100 eligible participants must file audited financials along with Form 5500, which are closely scrutinized during DOL audits. While there are many similarities between audits of 403b and 401k plans, auditors and sponsors of 403b plans face several unique audit and administrative challenges specific to those plans.

Audits of 403b plans have only been required since 2009, and while audit professionals have had time to adjust to the new requirements, several red flags continue to plague sponsors and auditors alike. Determining which accounts need to be reported on financial statements, and continued variances between plan documents and administrative practices present potential issues for plan sponsors.

Benefits audit professionals and advisers must know the areas of focus for both the IRS and DOL in a Form 5500 before filing—and be able to identify problems in prior filings to get ahead of any issues with the IRS with appropriate amendments. Understanding common areas of deficiency can help you increase your accuracy in filing, take action to correct prior errors, and prepare for IRS and DOL audits.

Listen as our panelists offer best practices and insights based on real world experience for avoiding common high risk mistakes associated with 403b audits. The panel will also outline approaches to identify and correct plan errors before an audit or after a filing.

1. 403b plan regulatory overview
   1. Relevant forms and regulations
   2. Form 5500
   3. 80/120 Participant Rule
   4. Discrimination testing
2. 403b Financial Statement Issues
   1. Other beginning balance disclaimers
   2. FAB 2009-02 disclaimer
   3. Loans
   4. Common investments
   5. Multiple service providers
3. Common 403b plan operation errors
   1. Definition of compensation
   2. Deviations between plan documents and administration
   3. Eligibility
   4. Others
   5. Potential fixes for errors
4. Benefit plan audit experiences

The panel will discuss these and other important topics:

• Common areas of deviation between 403b plan documents and administration
• Challenges in determining what accounts must be reported on audited financial statements
• The 80/120 Participant Rule

Learning Objectives

After completing this course, you will be able to:

• Determine what 403b plans are subject to requirements to have audited financial statements
• Recognize common errors in 403b plan statements and filings
• Discern how to correct prior year errors
• Identify audit strategies to respond to IRS or DOL examinations

• Field of Study: Auditing
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex audits and schedules; supervisory authority over other auditors/accountants. Knowledge and understanding of 403(b) Plans, ERISA Titles I and II, and proper completion of Form 5500; familiarity with IRS and Department of Labor audit procedures and enforcement

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.