What “audit-ready” means for a plan committee
Audit-ready does not mean the plan will be audited this year. It means that if an auditor, regulator or attorney asks how the committee made its decisions, the answer is already on file.
Who might ask. The plan's independent auditor, for plans above a size threshold (generally 100 or more participants). The Department of Labor, in an investigation. Participants' attorneys, in litigation. And, closer to home, a new committee member or HR leader who inherits the plan and needs to understand it.
What a reviewer looks for.
- Governing documents. The plan document, the committee charter, and an investment policy statement.
- Minutes that show reasoning. Dates, who attended, what materials were reviewed, what was decided, and why.
- Fee reviews. What the plan pays, and evidence the committee compared it with the market.
- Provider monitoring. The annual reviews of each service provider, and the searches run when one was replaced or benchmarked.
- Investment monitoring against the policy. Which funds were watched, which were replaced, and the rationale.
Where the gaps usually are.
- Minutes record the outcome but not the reasoning.
- Documents are scattered across email inboxes and personal drives.
- A review happened, but nothing shows it.
- The record sits with a provider or a person, and leaves when they do.
- The file is assembled from memory when someone asks for it, rather than kept as the work happens.
What to do about it.
- Keep one decision log, with the date, the decision, the people involved and the reason.
- Attach the support to each decision: the report, the proposal, the minutes.
- Put recurring reviews on a calendar, and record that each one happened.
- Keep the record in one place that belongs to the plan, not to any one provider or person.
- Write down the why. A decision without its reasoning is hard to defend later, even when it was a good one.
None of this guarantees any particular outcome in a review. It does mean the committee can show what it did, when and on what basis.
Perseptiv keeps the committee's record as the work happens, so it is organized, current and ready when someone asks.
Talk to us about your plan.
General information, not legal or investment advice.