Does a small ESOP need a CPA's audit?

[Peter Gulia]

An ESOP retirement plan has fewer than 100 participants at both the beginning and the end of the plan year. All of the plan's assets are "qualifying plan assets" within the meaning of the 104-46 rule. The employer securities are not publicly traded.

Is there anything about the ESOP nature of such a plan that would preclude it from relying on the small-plan excuse from an independent qualified public accountant's audit of the plan's financial statements?

[GMK]

The audit provides a level of independent proof, if you will, that the plan is being run properly, which is significant protection for the plan sponsor and the fiduciaries, should anyone care to raise questions.

In addition, the audit can catch things early for correction before they become a lengthy history of oops.

It's expensive, but I'm glad that we do it for our little ESOP.

[ESOP Guy]

We have plenty of small ESOPs as clients that don't have audits done and rely on the small plan exception.