What Procedures Are Performed in an ERISA 103(a)(3)(c) Audit?

The primary difference between an ERISA 103(a)(3)(c) and an ERISA non 103(a)(3)(c) audit is that an ERISA 103(a)(3)(c) audit does not require substantive testing of investments such as year-end market values, interest and dividends and realized and unrealized gains/losses on investments. Instead, auditors retained to perform an ERISA 103(a)(3)(c) audit, obtain a certification from either a bank, trust company, or insurance company (qualified institution), whereby the qualified institution (bank, trust company or insurance company) certified the “completeness and accuracy” of the investment data accompanying the certification. Upon receiving an acceptable certification, the auditor would limit their procedures to comparing the certified data to amounts presented in the financial statements.

So the natural question would be what exactly is done in a ERISA 103(a)(3)(c) audit of an employee benefit plan?

Other than those audit procedures performed on investments in an ERISA non 103(a)(3)(c) audit, ERISA 103(a)(3)(c) audits and ERISA non 103(a)(3)(c) audits include the same procedures. These procedures primarily relate to the other operational aspects of the plan and include testing of participant records, such as the allocation of contributions and earnings to individual participant accounts, employee and employer contributions, benefit payments and an evaluation of internal controls over financial reporting to properly plan the audit procedures (although controls are not required to be tested in either audit). The audits also focus on the plan’s compliance with ERISA regulations and the specific plan provisions as noted in the plan document.

Author: Alyson Giambrone | [email protected]