Jump to content

ESOP audit - Former TPA summary annual report incorrect


Recommended Posts

Group:

Client's ESOP is under audit. Along with a number of affiliated entities.

Due to health reasons clients' former TPA resigned in early 2021 and a new TPA was hired. 

The auditor has inquired about an alleged $22k contribution in the plan year under audit (2018).  However, the 5500 does not reflect any

contribution.

I can't seem to reconcile where the former TPA came up with the $22k of contributions.  Nor can I reconcile plan stock forfeitures.

We have already informed the auditor that a former TPA prepared the annual reports and 5500's.  and are working with the new TPA.  I'm well aware that the taxpayer/client may still be held liable for any record keeping fines/tax assessments notwithstanding errors caused by the former TPA.

Q:  Would you inform the auditor that there were no contributions and the auditor's report inadvertently stated that there was a contribution?

This does not change the participants share account values.

Also state that the taxpayer is in process with new tpa to amend the report to properly reflect no contributions.

Thoughts and comments appreciated.

Link to comment
Share on other sites

If it's not on the 5500, what annual report are you referencing?  Also you're switching between auditor and TPA references so I'm not sure who is the source of the bad information and who is questioning it.  If the participant share values won't change because of this phantom $22k, or the unreconciled forfeiture, what then is the net change to the plan assets?  Contributions are an employer deductibility issue, start with the applicable period's income tax return, and make sure that, the 5500, and the cash flows to the Plan are all in agreement.  Any proposed amendments to filings encompassed by the audit will need to be approved by the auditor under the CAP.

Link to comment
Share on other sites

I would tell the auditor. Depending  on the size of the plan $22k will be declared immaterial by the auditor. 

Besides  give the size of the mess, they are still working on 20018, you are going to need the auditor's help.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...