ERISA AuditsHR Resource
June 13, 2013 — 2,370 views
The Employee Retirement Income Security Act, also known as ERISA, is a federal law of the United States of America. It ensures the implementation of employee benefit plans to the employees of companies choosing to offer health and benefit plans to its staff. This federal act protects the employees against employers that may not be implementing benefits properly for their own benefit – with the penalties ranging from simple fines to criminal charges.
Audit Requirements and Rules That Apply to the Audit
There are a number of applicable laws and requirements that come under the umbrella of ERISA. For instance, the program ensures that the employee benefit plans are established as well as maintained in a financially sound manner while also being fair across the board of employees. Coverage and compensation under ERISA stretches over:
- Pension plans
- Health benefit plans
- Pension vesting
- Pension funding
- ERISA pre-emption
The department of labor conducts regular checks on companies through ERISA audits and keeps a check on the working and streamlining of the various aspects of the program.
ERISA audits apply only to private or non-government organizations that offer their employees health insurance coverage or any other benefit plans.
Compliance Assistance Materials
Since ERISA is federal law, the government has setup a number of portals to help businesses fall in line with the requirements as well as allow employees to access knowledge databases for the same. Spreading the knowledge is an important aspect of making sure that the rules are followed religiously. It helps to understand exactly how the benefit plans work in a variety of scenarios – including what you are entitled to do in the unfortunate event of your employer going bankrupt. There are also a number of eTools that have been setup to help you with any compensation advice you may need.
The ERISA audit checklist is made for employers that have offered their employees health benefit plans to ensure that they stay clear of any trouble during the audit. It suggests that the employers perform an overview of all the plan details across the employees, and ensure that all plans fall within the ERISA regulations. Checking for factors such as the ‘Grandfather status’ is an essential part of the audit while non-discrimination testing for certain plans is also essential. New hire and employee communication materials need to be reviewed in order to ensure that they do not fall foul of ERISA.
Hiring an Auditor to Help youwith ERISA Audits
How you go about choosing the auditor to conduct your ERISA audits is an essential part of the process. Given that the entire process is a rather specialized field, you might be making a mistake by simply going to your corporate auditor, who may not necessarily be skilled in the methods of ERISA auditing. Another aspect to keep in mind is to avoid going for the lowest quotation because of cost-cutting factors. The old adage of ‘you get what you pay for’ is very true in the world of finance and accounting. Make sure that you ask the chosen auditor for his qualifications and continuing education in the field. Look to see if he or she is involved with the Employee Benefit Plan Audit Quality Centre.
All in all, make sure that your company or organization does everything it possibly can to stay on the right side of the ERISA regulations. Compensation on account of negligence can be not only harmful for your company’s reputation, but also for its financials. Additionally, the fact that criminal charges can be faced means extra measures must be taken to avoid problems.