What to consider when auditing during a pandemic

Written on Mar 11, 2021

By Jessica Salerno, OSCPA senior content manager 

Nothing about the past year has been normal for companies, which means auditors of employee benefit plans need to consider new issues in their work. 

“Some questions auditors are going to want to ask to relate to what changes might have occurred in the plan operations, both at the company, as well as how the plan sponsor processed transactions with the plan providers,” said Michelle Buckley, CPA, vice president at Meaden & Moore.  The auditors will want to ensure that they're considering all the potential risks as part of their audit planning.” 

Woman smiling for camera.

Buckley will present her session “Unique Audit Issues in a Pandemic Environment,” at the Employee Benefit Plan Audit Virtual Conference on April 23. She said one of the biggest questions auditors face because of the pandemic is if the company being audited had any layoffs, reduction in workforce or terminations. 

“Could any of those changes in personnel affect eligibility?” said Buckley. “Potentially, it may affect the break in service rules of the plan document. It may impact vesting. The demographic data is the driving force in most audits, as the plan provisions are typically based on hours of service or the years of service.  These are key items that the auditors want to be aware of so they can adequately plan for their risk assessment.” 

Internal controls and IT security are other crucial areas to consider, she said.  Many companies had employees working remotely in 2020 and 2021.  Depending on the circumstances, individuals may have changed some of their day-to-day processes which could impact existing internal controls.  Also, when individuals are working remotely, are they on public WiFi or a secure network.   if someone is using a printer at home, ask how they are storing those documents – especially if they share their work at home space with others. 

Buckley said she hopes attendees leave her presentation with better general knowledge of the CARES Act, “particularly with the changes to loans and distributions.” 

“For loans, there were specific timeframes that were laid out in the regulations that some people may not be aware of,” she said. “With distributions, the Act provided qualification requirements. The Plan Sponsor can rely on the employee’s certification that the employee had met the eligibility requirements for the coronavirus distribution.  The Plan Sponsor does not have to verify that the employee was eligible. ” 

Buckley said the amount of change in the last year will present new challenges for auditors, as many companies were dealing with issues they had never experienced before. 

“The biggest challenge is that many of our plan sponsors had a lot of other things on their mind last year,” she said. “They were applying for PPP loans, they had to juggle changes in the location of their workforce, disruptions in their operations and enhanced safety measures for their employees to name a few.”