From Overdue to Oversight: Resolving Gaps in Multi-Year Employee Benefit Plan Audits

When Change Impacts Compliance

For many growing organizations, the transition from a “small plan” to a “large plan” filer can outpace administrative capacity. A plan becomes a large plan when it has 100 or more participants with account balances at the start of the plan year. That change often isn’t identified until a notice arrives or a due diligence review reveals several years of missed employee benefit plan (EBP) audits and Form 5500 filings. Late filings also commonly stem from internal transitions—a new HR director, CFO, or other leadership changes can create gaps in responsibility and lead to oversights.

At Calvetti Ferguson, we recognize that falling behind is usually a byproduct of rapid growth or organizational change. However, the Department of Labor (DOL) and the Internal Revenue Service (IRS) view these requirements strictly. Our focus is on resolving noncompliance efficiently and protecting both your organization and its employees.

The Risks of the “Wait and See” Approach

Failing to file Form 5500 (including the required audit report for large plan filers) by the deadline can trigger significant penalties from both the IRS and the DOL, sometimes amounting to thousands of dollars per day. Beyond the financial impact, prolonged filing gaps can draw regulatory attention and increase the likelihood of a full plan investigation, which can lead to additional penalties and corrective actions.

The most effective way to mitigate these risks is proactive correction. Addressing multiple years of late filings together often enables the use of relief programs such as the Delinquent Filer Voluntary Compliance Program (DFVCP), which can substantially reduce penalties while bringing plan records fully up to date. Working with auditors who specialize in 401(k) audits helps streamline the remediation process—reviewing the draft Form 5500s prepared by your Third-Party Administrator (TPA) for accuracy and completeness, preparing audit reports, and coordinating with plan service providers.

The Benefits of a Multi-Year Audit

When a company is two or more years behind, the prospect of an audit can feel daunting. Conducting a multi-year audit engagement offers clear strategic advantages. Rather than treating each year as an isolated incident, our approach looks at the full timeline, which enables:

• Centralized data collection: We streamline the request for historical payroll records, personnel files, and other documentation, reducing the administrative burden on HR and finance teams.
• Consistency in methodology and comparability: Applying a uniform audit approach across years reduces rework and makes results easier to compare. A comprehensive review of the entire timeline reveals recurring issues and their root causes so remediation can be targeted and effective.
• Faster resolution and negotiation: Multi-year sampling and reconciliations make it easier to reconstruct missing records or explain anomalies; organized documentation simplifies responses to regulators or other third parties.
• Actionable remediation plan: We provide prioritized, integrated recommendations to address systemic control weaknesses and help prevent recurrence.

How Calvetti Ferguson Can Help

The assurance team at Calvetti Ferguson is recognized among the top EBP audit firms for helping companies navigate the complexities of multi-year EBP audits. What sets our EBP assurance service apart is partner-level involvement.

Audits for multi-year filers are high-stakes engagements that require seasoned judgment and strategic advocacy—far beyond “checkbox” compliance. We provide direct access to a partner and senior manager who specialize in EBP compliance, offering experienced advisors who can:

• Interpret DOL requirements: Translate DOL rules into practical strategies, including the strategic use of voluntary correction programs to minimize exposure.
• Strengthen internal controls: Identify process and control weaknesses and provide prioritized, practical recommendations to reduce the risk of recurrence.
• Conduct technical deep dives: Perform thorough reviews of plan documents, participant data, and employer contributions to ensure accuracy across all years.
• Streamline communication: Serve as a single point of contact to manage the flow of information between your plan recordkeeper, TPA, and our audit team.

Ongoing Readiness

Maintaining compliance after a multi-year employee benefit plan audit is not a one-time fix—it’s an ongoing commitment. Don’t wait until the next audit notice arrives to take action.

As a trusted advisor, Calvetti Ferguson is here to help you develop a comprehensive employee benefit plan audit strategy that keeps your plan aligned with evolving regulatory requirements. By prioritizing ongoing readiness today, you safeguard your organization while ensuring your employees’ benefits remain protected for years to come.

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