| Course | ACC 645 Advanced Auditing |
|---|---|
| Module | Module 5 |
| Paper type | graduate assignment on an ERISA employee benefit plan audit |
| Length | About 1,020 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 645 Module 5
Audit of the Company 401(k) Savings Plan for 2025
[Student Name]
Southern New Hampshire University
ACC 645: Advanced Auditing
Module Five Assignment
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Audit of the Company 401(k) Savings Plan for 2025
Introduction
The company sponsors a 401(k) savings plan for its own employees. At the start of 2025, 2,900 participants had account balances, and net assets available for benefits at year end are about $312 million. Because the plan has 100 or more participants with balances, ERISA requires the plan administrator to file Form 5500 with financial statements audited by an independent qualified public accountant. The plan does not file Form 11-K, so the audit follows AICPA standards, including SAS 136 on benefit plans (American Institute of Certified Public Accountants, 2019), rather than PCAOB standards.
Type of Audit
The plan's trustee, a national bank, holds the investments and certifies their values and investment income as complete and accurate. The plan administrator elected an ERISA Section 103(a)(3)(C) audit, which SAS 136 permits when the certification comes from a qualified institution. Under SAS 136, the auditor must evaluate whether the certifying entity qualifies, compare the certified information with the financial statements and disclosures, read the disclosures related to investments for consistency, and audit all information not covered by the certification. The certification covers investment values and income, about 96 percent of net assets, but not contributions, participant loans, distributions, forfeitures or plan expenses. Arens et al. (2020) note that this kind of engagement still carries substantial work; it narrows only the investment testing.
Risk-Based Testing
The auditor assessed risks by plan provision and designed tests accordingly.
Key risks and procedures
| Area | Risk | Procedure |
|---|---|---|
| Employee deferrals | Withheld amounts not deposited timely or completely | Compare payroll deferral reports with trust deposits for all pay periods |
| Employer match | Match calculated on wrong compensation definition | Recompute match for 40 participants using the plan's definition of compensation |
| Eligibility and enrollment | Eligible employees not auto-enrolled at 4 percent | Test 40 new hires from HR records for timely enrollment |
| Participant loans | Loans exceed limits or defaults not treated as distributions | Test 25 loans for limits, terms and repayment |
| Distributions | Payments to ineligible participants or wrong amounts | Test 40 distributions to approved requests and vested balances |
| Forfeitures | Forfeitures held unused rather than applied as the plan requires | Reconcile the forfeiture account and test use during the year |
Sample sizes reflect moderate risk and the plan's history of clean results under the prior auditor. Deferral remittance is tested for every pay period rather than sampled, because a single failure affects every participant at once and the payroll migration raised the risk this year.
The Late Deposit Finding
In June the company moved its own payroll onto the new version of its platform. For two semimonthly pay periods, the file sending deferrals to the trustee failed, and $1.46 million of deferrals and loan repayments was deposited 9 to 12 business days after the pay dates, against the plan's usual two days. Department of Labor regulations require deferrals to be deposited as soon as they can reasonably be segregated from the employer's assets; the seven-business-day safe harbor applies only to plans with fewer than 100 participants. The plan's own history shows two days is reasonable, so these deposits were late.
Late deposits are a prohibited transaction because the employer had the use of plan assets. The company must restore lost earnings, which the auditor recomputed at about $2,100 using the Department of Labor's calculator, and may use the Voluntary Fiduciary Correction Program. The amounts must be reported on Schedule H, line 4a, and in the supplemental schedule of delinquent participant contributions, which the auditor reports on. The irony that a payroll processor delayed its own deposits will not escape the plan's participants, and the audit committee should hear about it.
Other Findings
Testing of eligibility found two employees hired in April who were not auto-enrolled for four months because of a data mapping error, a plan operational failure the company must correct under the IRS correction program with corrective contributions of about $3,600. No exceptions were found in loans, distributions or the match. Forfeitures of $186,000 were used to reduce employer contributions within the year, as the plan document requires. Plan expenses paid from participant accounts were traced to recordkeeper invoices and agreed to the fee disclosure participants received.
Independence and Audit Quality
The plan auditor must be independent of the plan and the sponsor under Department of Labor rules, which in some respects differ from SEC rules. The firm performing the plan audit is not the company's financial statement auditor and provides no other services to the plan. The Department of Labor's review of plan audits found that many had major deficiencies, often from limited experience with plan-specific risks (U.S. Department of Labor, 2015), which is why the firm assigns only staff who audit benefit plans each year.
Communications and the Plan Sponsor's Role
The plan administrator, not the company's finance department, is responsible for the plan's financial statements and for its compliance with ERISA, and the administrative committee will sign the representation letter. SAS 136 requires the auditor to obtain the administrator's acknowledgment of responsibility for the certification election and to communicate findings of noncompliance with plan provisions to those charged with governance. The late deposits and the enrollment failure will be described in a letter to the administrative committee with the auditor's recommendations: an automated alert when the trustee file fails to transmit and a monthly reconciliation of HR eligibility data to plan enrollment records. The auditor will also read the draft Form 5500 to check that the Schedule H amounts agree with the audited statements and that the delinquent contribution line reports the June deposits.
Report and Supplemental Schedules
Under SAS 136, the report on a Section 103(a)(3)(C) audit states that the investment information certified by the trustee was not audited, describes the auditor's procedures on it, and gives an opinion on whether the information not covered by the certification is presented fairly and whether the certified information agrees with or is derived from the certification. The report also covers the supplemental schedules of assets held at year end and delinquent participant contributions. The auditor will also communicate the late deposits and the enrollment failure to the plan administrator and those charged with governance.
References
American Institute of Certified Public Accountants. (2019). Forming an opinion and reporting on financial statements of employee benefit plans subject to ERISA (Statement on Auditing Standards No. 136). Author.
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2020). Auditing and assurance services (17th ed.). Pearson.
U.S. Department of Labor. (2015). Assessing the quality of employee benefit plan audits. Employee Benefits Security Administration.
What the ACC 645 Module 5 instructions ask for
The Module Five assignment in ACC 645 usually asks you to plan or evaluate an audit of an employee benefit plan subject to ERISA. Plan to explain when an audit is required, whether a Section 103(a)(3)(C) audit with certified investment information applies, what SAS 136 requires for the certification and for areas outside it, and which risks matter most in a defined contribution plan: contributions and remittance timing, eligibility and enrollment, participant loans, distributions, forfeitures and plan expenses. Many versions include a finding, such as late deposits or plan document errors, and ask how it affects the audit and the supplemental schedules. Cite SAS 136 and the Department of Labor's requirements specifically, and say who is responsible for each step, the auditor or the plan administrator.
How this ACC 645 Module 5 benefit plan audit assignment example is built
The paper explains that the plan, with 2,900 participants, must file Form 5500 with audited financial statements. The plan administrator elects an ERISA Section 103(a)(3)(C) audit because the trustee certifies investment information, so the auditor evaluates the certification and compares it with the statements but does not audit the investments. Tests cover contributions, eligibility, loans and distributions. A payroll migration in June delayed deposits of $1.46 million of deferrals by 9 to 12 business days. The paper treats those as prohibited transactions requiring lost earnings, reported on the supplemental schedule of delinquent contributions, and explains the report form, including what the opinion says about the certified amounts.
Where the ACC 645 Module 5 rubric puts the points
Rubrics for the benefit plan assignment typically score the audit requirement, the choice and conditions of a Section 103(a)(3)(C) audit, procedures on certified and uncertified information, the risk-based tests, evaluation of findings, supplemental schedules and the report. Top papers explain what the certification covers and what it does not, design tests linked to defined contribution plan risks and treat late deposits as a compliance issue with reporting consequences, not only a timing difference. Graders also reward awareness of independence rules for plan auditors and of the Department of Labor's concerns about audit quality. Common deductions include auditing investments the trustee certified, ignoring remittance timing, applying PCAOB standards to a private plan audit and omitting supplemental schedules.
ACC 645 Module 5 help: the mistakes that cost points
Benefit plan papers most often slip on the certified investment information: under SAS 136 the auditor must still evaluate whether the certifying institution qualifies, compare the certified amounts with the statements and audit everything outside the certification, such as contributions, benefits and participant data. A second weak spot is late deposits, which are measured against when deferrals could reasonably be segregated, not a fixed number of days for large plans. If your plan is a defined benefit plan, actuarial information becomes the central risk and the same framework applies. List each plan provision tested and the sample used; graders look for coverage of the provisions most often misapplied.
Get ACC 645 Module 5 written to your instructions
Send the ACC 645 Module 5 assignment and the plan facts. The paper will determine the audit type, apply SAS 136, design tests for the plan's risks, evaluate findings such as late deferrals and explain the report. Turnaround is two days, and the first is on us. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 645 Module 5 questions, answered
Where can I find a free ACC 645 Module 5 Benefit Plan Audit sample?
This page includes a full ACC 645 Module 5 assignment auditing a 401(k) plan with certified investment information and late deferrals.
When does a 401(k) plan need an audit?
Generally when it has 100 or more participants with account balances at the beginning of the plan year, requiring audited financial statements with its Form 5500.
What is an ERISA Section 103(a)(3)(C) audit?
An audit in which investment information certified by a qualified bank, trust company or insurer is not audited, though the auditor evaluates the certification and audits other plan information, reported under SAS 136.
Why are late deferral deposits a problem?
Participant contributions held by the employer longer than necessary are plan assets used by the employer, a prohibited transaction requiring lost earnings to be restored and disclosure on the supplemental schedule.
Which standards apply to a 401(k) plan audit?
AICPA auditing standards, including SAS 136, along with ERISA and Department of Labor regulations; PCAOB standards apply only for plans filing Form 11-K with the SEC.