First, the bad news: Three out of every 10 employee benefit plan audits in Maryland fail to meet minimum requirements for professional standards, according to the Department of Labor. That means more than $38 billion in Maryland plan assets are currently at risk due to deficient audits.

“In our view, this rate is both abnormally high and disconcerting,” Department of Labor Chief Accountant Ian Dingwall told me recently.

Maryland isn’t alone. Deficiency rates for the country as a whole are nearly as high. And thanks to a rule that will soon require 403(b) plans to be audited just as 401(k)s are today, the number of audits being done will soon rise by up to 10 percent, and DOL officials worry the number of deficient audits will rise with them.

Read more about the potential causes and impacts of the deficiencies here.

Now, the good news: CPAs and DOL officials are joining forces to try to improve those numbers. Here are just of a few of the ways in which they are doing so:

• A “boot camp” for auditors of employee benefit plans. The one-day event will be run jointly by the MACPA and the DOL in an effort to educate new and incoming auditors about the essentials of conducting ERISA audits. The date and location of the “boot camp” will be announced shortly.
• A session at the first-ever Maryland Business and Accounting Expo, scheduled for June 17 and 18 at the Baltimore Convention Center. The session will be led by Dingwall, who will discuss the situation in detail and possible solutions for improving the quality of ERISA audits in Maryland.
• A number of on-site training programs offered by the MACPA and designed to educate auditors on the proper ways to conduct the audits.
• An “oversight task force” made up of members of the MACPA’s Board of Directors. The task force will take a closer look at the DOL’s initiative and monitor the progress being made by Maryland auditors.

There are a number of other resources available as well, all of them designed to increase the proficiency of employee benefit plan auditors. They include the following:

• Employee Benefit Plans: Audit and Accounting Essentials, an MACPA program scheduled for Sept. 24, 2008
• Retirement Planning Strategies for Executives and Business Owners, an MACPA program scheduled for Nov. 24, 2008
• Audits of 401(k) Plans, an MACPA program scheduled for May 8, 2009
• The AICPA’s Employee Benefit Plan Audit Quality Center
• Audit quality and auditor selection tools from the AICPA

What’s your take on these deficiencies? What else should be done to improve audit quality?

Learn more at the Expo
DOL Chief Accountant Ian Dingwall will be on hand to discuss audit quality in person at the first-ever Maryland Business and Accounting Expo, slated for June 17-18 at the Baltimore Convention Center. Get details about the Expo and register here.