What is an AUP?
An Agreed Upon Procedures (AUP) engagement is designed for a practitioner to perform specific procedures over a specified subject matter. For employee benefit plans, this would encompass us testing select transactions, processes, and procedures over the employer sponsored employee benefit plan.
Once the procedures are complete, we report the findings to the plan manager but do not provide an opinion or conclusion on the engagement. While we have a standardized set of procedures for employee benefit plan AUP engagements, the procedures performed can be customized and tailored to the employersโ needs and desires.
Whatโs the difference between an employee benefit plan audit and an AUP?
Under most circumstances, defined contribution plans (401k, 403b, ESOP, etc.) require audits if the plan has 100 participants with balances. Audits are required to follow specific guidelines to cover all facets of the employee benefit plan audit and conclude with financial statements and an independent auditorโs report.
AUP engagements can be finetuned to only focus on areas of concern or areas at higher risk for failures. Under both an audit and AUP, we are required to report the findings to management. An AUP is not required by a regulatory body but would be an election of plan management to help improve the plan and identify potential issues.
Why do I need one?
Employee benefit plans such as 401(k) and 403(b) plans are required to follow numerous rigid plan provisions. Plans are also subject to various Internal Revenue Service (IRS) and Department of Labor (DOL) regulations. These provisions and regulations are established to protect the rights and benefits of the planโs participants.
Plan sponsors and administrators have a fiduciary responsibility to protect the participantโs benefits. If a plan is not being operated appropriately, the planโs participants may be negatively impacted which could cause the plan to be susceptible to unnecessary corrections made by the plan sponsor, fines, and/or penalties for non-compliance.
AUP engagements over employee benefit plans are designed to help uncover common plan failures. An AUP engagement can better ensure plan participantsโ assets are being administered appropriately, participants are treated properly, and potential current plan issues are identified and resolved before becoming an even greater problem.
How can KT help?
Whether the plan has been in place for decades or just getting started; whether the plan has suspected issues or itโs simply time to do an annual checkup; whether you have 5 employees or 100 employees, we can help make sure the plan is operating effectively.
Our team of specialized employee benefit plan professionals have the experience and training to help take care of your employee benefit plan needs. We work hand-in-hand with your employee benefit plan administrators to make sure you receive timely, dependable, and constructive guidance to help improve your plan processes and procedures.
What does an AUP engagement entail?
An AUP engagement requests us to test a selected number of plan participants, their transactions during a given period (such as during a specific plan year) and verify the participants contributions were done in accordance with the plan provisions and IRS/DOL regulations. This would likely focus on the testing of participant eligibility, compensation, and annual employee and employer deferrals. However, the testing can also include the testing of other types of transactions such as distributions, loans, and expenses. The great part of AUP engagements is that the procedures can be tailored to you and your plan needs.
Contact us Today!
If you are interested in learning more about having an AUP engagement performed for your benefit plan, or would like to know more details, please contact me, Austin.
