Challenge: The Employee Retirement Income Security Act (ERISA) covers retirement, health, and other welfare benefit plans and ensures that managers of these plans meet certain standards of conduct and reporting requirements. Certain employee benefit plans are required to be audited each year to ensure that the plan is being managed in accordance with the plan document and that plan funds are being used appropriately. As the agency charged with enforcing the provisions of ERISA, the U.S. Department of Labor (DOL) Employee Benefits Security Administration (EBSA) sought to assess the quality of audits performed for benefit plans. It further sought to understand the characteristics of auditors that conduct both high- and low-quality audit reviews.
Solution: DOL engaged Summit to plan, select, and evaluate a statistical sample of benefit plan audits. This included development of a questionnaire to obtain key information from the sampled auditors, in addition to the execution of a two-stage sample design. The team found that nearly 40% of all work performed had major deficiencies, which put $656 million in assets and 22.5 million plan participants at risk. The study also found that the annual volume of audits an auditor completed was a strong indicator of quality. The full report can be found here.