Audit Opinion for 401(k) Plan of 175 Participants - How Much Should It

[Guest Paul Sarmiento]

We have received a quote of $12,000 to perform the audit on our 401(k) plan of 175 participants. Does anyone know if this is a reasonable amount? It seems quite high for the plan size. We are currently in search of other competitive quotes. Any suggestions on the range we should expect?

[Guest Boilerburm]

Might be high, might be low, might be just right! The number of participants is frequently not the most important factor in how much the audit would cost. What financial institution(s) holds the assets, how organized and cooperative the client is, number of locations participating in the plan, and any number of other things would factor in to how much is charged for the audit.

[Guest Paul Sarmiento]

If I could only pay them in porridge! The quote parade continues.

[RCK]

In our experience, the key determinant of audit price is whether the plan is subject to a full scope audit (participant directed with a company stock option), or just a limited scope audit.

Other than that, I agree with Boilerburm.

[GBurns]

It is a ridiculously high fee!!!

You could rerun the payroll and recreate every entry, write a book of ROIs to a dozen trustees, wait on their replies, then put together the figures and still not use up enough hours to justify $12,000 unless the hourly rate at all levels (including the secretary)was in the region of $400 per hour.

[Guest tompga]

I would agree with above post that it depends! I would not agree that it is ridiculously high. Do you have participant directed accounts? Can participants change investments or other options by use of the telephone or internet? Can you get SAS 70 reports from your service providers? What type of investments are involved? How good are the internal controls?

The post refering to $400/hour would indicate that the job should take about 30 hours including administrative time. This seems very low unless it is a very simple audit.

[Kristina]

I hope you have given those quoting for the audit more information than you have given here.

Otherwise, your quotes could be high because they suspect more time will be involved. Better to quote high and bill low than to quote low and bill high.