Auditor's Report

[khn]

Our client's auditor found the plan has been using the wrong definition of compensation going back 10 years, so they said they doubt they will be able to finish their report by Oct 15th because they need to know the financial implications. What does this mean... can they not file their 5500 on time now? Will they be penalized for this?

[Andy the Actuary]

And this changes what -- the actuarial certification which is not their responsibility or the benefits paid which were what the PA requested the Trustee to pay. Perhaps, they should simply qualify their letter. Also, where have they been the last 10 years? I.e., if THEY were doing their job, this would have been caught sooner. They share in this issue. Finally, you may want to verify that the auditor is correct because the auditors generally don't have the expertise in calculating benefits.

Someone needs to have a come-to-you-know-who conversation with them and let them know that the client will be looking to them to share in any penalties. Most of all, the client should consider finding a new auditor -- one who when he identifies issues does not drop them on the client at the last minute and put the client in financial harms way.

[khn]

I agree! This is only the third year this company has been doing their audit but I thought they should have caught it sooner. Thanks for the sanity check.

[ESOP Guy]

To answer your question they can not file on time a correct 5500. You can try to file and put a pdf note in the auditors attachment place on the efile. I hear that buys you some time but that is still an incomplete return.