Qualified or adverse audit opinion

[JanetM]

We are having a little tiff with our auditors. What is the impact to the plan and/or plan sponsor if the audit has a qualifed or adverse opinion.

I really have to wonder since this is limited scope audit and they really aren't giving an opinion in the true sense of the word.

Does anyone have any experience with this sort of thing?

[E as in ERISA]

That would not be good. What is the topic? Is it worth a DOL audit?

[JanetM]

We understated assets in DB plan due to demutualization proceeds coming at same time we changed trustees. Now, the week the 5500 is due, they want to delay the entire filing in order to restate and reaudit 2002 and 2003.

We want to just note it in footnotes. That way we don't have to redo vals or schedule Bs.

[E as in ERISA]

I'm guessing that they are less likely to budge on a financial issue. Do you have an argument that the money wasn't plan assets for the applicable year? Hasn't the DOL informally indicated that they are plan assets once you know how much belongs to the plan (implying it is not before that date). And/or you have up to a year to deposit. I.e., do you have an argument that the amounts don't hit the 2002 or 2003 financials?

[E as in ERISA]

If you don't resolve by 10/15, I would still file on 10/15 -- without an audit and with no box checked -- assuming audit report not issued.

[Kirk Maldonado]

Katherine:

Wouldn't you face a high risk of the return being rejected as incomplete if you file without an audit report?

[WDIK]

Wouldn't you face a high risk of the return being rejected as incomplete if you file without an audit report?

Are you any worse off than not filing at all?

[Kirk Maldonado]

If it gets rejected, you have wasted time and effort in preparing and filing the Form.

In my (limited) experience, every time I've had a client file a Form 5500 without the audit, it was rejected.

[Guest LVanSteeter]

I have had several plans 'forget' to attach their audit, so far all they have gotten is a DOL letter. The response was to send a copy of the audit with the letter.

Thus far, there has been no further ramifications.

[KJohnson]

My experience has been that you get one or two "inquiry" letters. This should ultimately be followed with a rejection if you don't respond, but I think the timing on the actual rejection could take several months or more in some circumstances. Once you get a formal rejection you still have 45 days:

2560.502c-2(b)(3) that states that:

An annual report which is rejected under section 104(a)(4) for a failure to provide material information shall be treated as a failure to file an annual report when a revised report satisfactory to the Department is not filed within 45 days of the date of the Department's notice of rejection.

A penalty shall not be assessed under section 502©(2) for any day earlier than the day after the date of an administrator's failure or refusal to file the annual report if a revised filing satisfactory to the Department is not submitted within 45 days of the date of the notice of rejection by the Department.