Deferral accrual - part of a pay period?

I've got this auditor on a couple of my large plans who insists on pro rating the final payroll and including that accrual on the 5500 Schedule H and audit report.

Example: weekly payroll, final week included on 2024 W-2 is the payroll of 12/28/24.  He will prorate the 1/4/25 payroll as 3/7 belonging to 2024, so therefore 3/7 of the deferrals on the 1/4/25 payroll must be counted as 2024 receivables and added to the 2024 reporting.  I refuse to add them to my administration, so we've got a reconciling item for that.

This is insane, right?  I'm no CPA, but I can't find any justification for this.  And it adds a bunch of extra work, which is even worse.

I'm meeting with the auditor next week, and I'm looking for something I can use to convince him to back off on this.  Any suggestions?  Thanks.

Reference the definition of compensation as spelled out in the plan document.  See if the guy's then *officially* full of poo.

If the auditor wants to put a reconciling item in their report let them and don't care.  I can't recall that ever being an issue with the IRS or DOL when they come a knocking.  In fact I wished more auditors would use that option instead of demanding I change the Sch H.   Often times it is they want to reclassify something and not change the totals.  Just agree to disagree and move on.   

Changing Schedule H upon their request immediately takes the "independence" of the audit to the woodchipper, doesn't it?

This is incorrect as "Compensation" is only compensation upon being paid to the employee. 

22 hours ago, Bri said:

Changing Schedule H upon their request immediately takes the "independence" of the audit to the woodchipper, doesn't it?

Maybe but a shockingly large number of auditors I deal with will refuse to issue a report until the Sch H and their report agree.   I can't tell you the number of times in my decades of doing this stuff I have had an auditor send me a pdf of the Sch H with the changes they want and it is things like round one type of income down by $1 and another type of income up by $1.   

I can't relate to them taking the time to actual mark up the Sch H and sending it to me.