ExpertMedium1 markMultiple Choice
CPA · Question 43 · Area II: Risk Assessment
Which of the following is a specific requirement for an audit of a defined contribution plan under ERISA (Employee Retirement Income Security Act)?
Which of the following is a specific requirement for an audit of a defined contribution plan under ERISA (Employee Retirement Income Security Act)?
Answer options:
A.
The auditor must test whether participant contributions were remitted to the plan in a timely manner.
B.
The auditor must perform a full audit of the plan's investments, even if held by a qualified institution.
C.
The auditor is not required to be independent of the plan sponsor.
D.
The audit opinion is always a disclaimer.
How to approach this question
ERISA/DOL focus: Protecting employees. Key risk: Employer keeping the money too long. Test: Timeliness of contributions.
Full Answer
A.The auditor must test whether participant contributions were remitted to the plan in a timely manner.✓ Correct
The auditor must test whether participant contributions were remitted to the plan in a timely manner.
In an audit of an employee benefit plan, a key focus is whether the plan sponsor (employer) remitted employee contributions to the plan trust within the timeframe required by DOL regulations. Late remittances are considered 'prohibited transactions'.
Common mistakes
Thinking limited scope audits are mandatory or that independence isn't required.
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