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6 Reasons to Specialize in Employee Benefit Plan Audits

Employee benefit plansSince Torrillo & Associates, LLC, (of which I am the managing member) opened in 2004, our local 15-person firm has been dedicated almost entirely to employee benefit plan (EBP) audits. We began doing these audits early in our careers, and when we were ready to go out on our own and realized what a great specialty they would be for a small firm, we became even more passionate about them. Specialization has proven to be an excellent choice for our firm because we’ve been able to distinguish ourselves in a complex area. If you’re wondering if this niche is right for you, take a look at some of the benefits we’ve enjoyed.

Our time and energy are focused. Before beginning our practice, we had worked on EBP audits at a Big Four firm, so we were aware that this was a highly specialized field. However, by working in this particular niche, we were able to invest all of our energy into becoming experts, focusing our training needs and giving us an advantage in the marketplace. We spend a lot of energy keeping up with new developments in our niche. Our firm’s quality control director and I volunteer our knowledge for AICPA and state CPA society technical projects and committees, and we send our staff to local and national EBP conferences. When taking on work, we stick to what we know and reach out to other experts when necessary, including the AICPA, the Department of Labor (DOL) or our network of ERISA and fiduciary advisors and investment advisors.

Our narrow focus is a competitive advantage. While we are a small firm, we actually stand out to clients when it comes to EBP audits. All our staff specialize in this area, and even some large firms’ local offices don’t have as many people specializing in EBP audits as we do.  

We can ease the process for our clients and avoid workload compression. Some of our competitors who do fewer EBP audits aren’t able to take on work in January with an April deadline due to commitments to other clients, or they charge a premium for these engagements. Our specialization enables us to plan ahead and avoid last-minute time crunches. For our clients, the audit is a once-a-year process, but it’s something we do year-round. We step in to help make it easier for them by “quarterbacking” the audit. Similar to how a quarterback leads the offensive team, we’ll lead the audit by getting information from our clients’ service providers and preparers of the Form 5500, gathering participant data from their human resources staff and coordinating our work with payroll. There’s less hassle for the client, and we’re better able to maintain control of our schedule and avoid overload.

We’ve built strong referral networks. We’ve had great success in creating a wealth of relationships with other firms. For example, we don’t do single audits or tax, so we refer that work out. Other firms are comfortable referring work to us because our specialization ensures that we are not going to compete for engagements outside our niche. We’ve also built great relationships with independent fiduciary and investment advisors who not only assist clients but provide tremendous opportunities to grow, network and advance our specialization.

We can spotlight potential pitfalls more easily. EBP audits are different from most audits because they contain two components: One is the financial statement audit, with which all auditors are very familiar. The second component is compliance, which includes the DOL (concerned with protecting plan participants) and Internal Revenue Service regulations (concerned with protecting taxpayers). The rules are complex, and auditors may not have a thorough knowledge of them if they don’t do a lot of EBP audits. Because our specialized experience makes us aware of possible problems, we can avoid missteps and help clients find and correct their compliance issues. This has paid off for us—the DOL inspected our firm most recently in 2016 with no matters noted.

We have a hiring and retention advantage. In a small firm with a narrow focus, staff get a lot of hands-on opportunities early on, which is something that has definitely helped us in the recruiting process. Our employees know they are making a difference when they fix a benefit calculation or save a client money. In addition, instead of being assigned to one person, our staff works with people at all levels, from partner on down. They take on a range of projects and receive a broad business perspective that will serve them well as their careers progress.

Choose a Niche and Build Your Expertise

Specialization has helped us build a thriving practice that allows us to manage our schedule, attract and keep great people and develop valuable networks. As all practice areas take on greater complexity, practitioners may find it more and more difficult not to specialize. But we can tell you from experience that CPAs who find a niche that they’re passionate about will enjoy many benefits.  

David A. Torrillo, CPA, ABV, CVA, managing member of Torrillo & Associates, LLC, in Glen Mills, PA. David is a member of the AICPA Employee Benefit Plans Expert Panel and the Pennsylvania Institute of CPAs Employee Benefits Plan Committee.

Umbrellas courtesy of Shutterstock.

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