Audit Quality Is a Fiduciary Decision—Not a Compliance Formality
For employee benefit plan sponsors, audit quality is not a technical detail, it is a fiduciary judgment with real regulatory and financial consequences.
Under the Employee Retirement Income Security Act of 1974 (ERISA), plan administrators are responsible for ensuring that required plan audits are conducted in accordance with auditing standards generally accepted in the United States of America (GAAS). For large plans, the audit is inseparable from the Form 5500 filing itself. Engaging an independent qualified public accountant is therefore not an administrative task; it is a fiduciary act.
When Audit Quality Breaks Down, Risk Accelerates
ERISA fiduciaries are obligated to act prudently and solely in the best interests of plan participants. When an audit is incomplete, poorly executed, or untimely, that obligation is not met. The consequences can include civil penalties, rejected Form 5500 filings, and, most significantly, personal fiduciary liability for resulting plan losses.
Audit quality failures also create operational drag. A deficient audit often triggers remediation, rework, and heightened scrutiny, consuming additional time and professional fees while diverting attention from plan governance priorities.
The Department of Labor Has Made Its Position Clear
The Department of Labor (DOL) has consistently identified employee benefit plan audit quality as an area of concern. Its reviews continue to find recurring deficiencies, particularly in audit procedures specific to benefit plans. These findings reinforce a clear message that technical compliance is not enough. The DOL expects audits to demonstrate depth, rigor, and plan-specific expertise.
Auditor Selection Is a Governance Decision
Given this landscape, selecting an auditor should be treated as a core governance responsibility.
Plan sponsors should ask whether the auditor:
- Is properly licensed or certified and subject to regulatory oversight
- Maintains independence from both the plan and the sponsor
- Has meaningful experience auditing the specific type of benefit plan
An auditor without specialized plan expertise may meet minimum credential requirements yet still expose fiduciaries to unnecessary risk.
Quality Audits Protect More Than Filings
A high-quality audit supports timely filings, reduces regulatory exposure, and strengthens fiduciaries’ defense of prudence. More importantly, it reinforces confidence that plan assets are safeguarded and participant interests are protected.
For fiduciaries, audit quality is not about checking a box, it is about making a defensible decision that aligns with ERISA’s core principle: acting in the best interest of those the plan exists to serve.
