Auditor requires 5500 to release report?

[Guest WilliamC]

The audit firm doing the annual audits of our DB plan and our 401(k) plan is telling us that they must have the completed 5500's in hand before the can issue their final audit reports. Is this truly a 'requirement'?

It is causing us a problem because we would like to present the audit reports to the plan trustees at a meeting in May, but the TPA's will not be able to complete the Form 5500's on such an early schedule.

Any insights appreciated.

[E as in ERISA]

They are required to review the 5500 and make sure it agrees with the audit before issuing it. If it doesn't agree, then they are required to footnote the audit noting the exceptions. In the past, some have issued based on an agreement by the client that they will make any changes to the 5500 necessary for them to be in agreement. But they may not be doing that anymore.....

[JanetM]

Can you present draft reports to board?

[Guest WilliamC]

Thank you for your replies.

If necessary we will present draft audit reports to the trustees as you (i.e., JanetM) suggest, but we would prefer to present final reports and avoid the need for disclaimers.

I talked to our actuary today who told me that this is not an issue that other clients have raised. Perhaps most sponsors are content to finalize their audit reports on a later timetable.

In any case, I know the auditors used to operate as Katherine suggests, that is based on agreement that the client will make any changes to the 5500 necessary for it to agree with the audited financials. This requirement to complete the 5500 before issuance of the final audit report certainly bogs the process down without, it seems to me, a whole lot of benefit.

[Guest Gordy]

An auditor would be foolish to issue an opinion under the understanding that a client would make any changes necessary. This type of activity is what has led to some of the problems incurred lately with audits. There is a good article in the 3/25 Wall Street Journal that touches on what happened when the auditor took the clients word.

This is akin to "I from the government and I'm here to help you".