Are You Audit Ready? What Every Plan Sponsor Should Know

Employee benefit plan audits can sometimes feel overwhelming for the HR professionals, payroll teams, and plan administrators who are responsible for pulling everything together on top of their day-to-day responsibilities. As an audit partner at Brown Edwards, I spend a lot of time thinking about how to make that experience less stressful and more efficient for everyone involved.

In a recent episode of the Brown Edwards Benefits Buzz Podcast, I sat down with two of our experienced EBP audit professionals, Jessica Hite and Shannon Cook, who work directly with clients during fieldwork. Together, we walked through the key ingredients of a smooth, well-run audit — and the common pitfalls that get in the way. Here’s what we covered.

Why Audit Readiness Matters

Let’s start with the most fundamental question: why does it matter?

Jessica put it simply: when a plan is audit ready, everything runs smoother. It reduces delays, improves the efficiency of our fieldwork, and brings clarity to both the client and the audit team. In her words, it “sets the tone for the entire engagement.”

I’d add one more dimension to that: our job is to perform the audit, but for our clients, the audit is added work on top of everything else they’re already managing. The more prepared they are going in, the less stressful the process becomes. Audit readiness isn’t just about making the auditor’s job easier — it’s about protecting your own team’s time and bandwidth.

Communication: The Biggest Driver of a Smooth Audit

If there’s one theme that came up again and again in our conversation, it was communication. Jessica pointed out that one of the most common problems they encounter is that changes from the prior year don’t get communicated to the audit team early enough. This includes things like:

• Changes in plan provisions
• Significant shifts in internal processes related to the plan
• A change in service provider or TPA
• Changes in internal staff or new contacts at the TPA or other providers

Knowing these things upfront allows the audit team to adjust their approach from the start and avoid surprises mid-engagement.

Shannon broke down what strong communication looks like across the three phases of an audit:

• Scheduling and Coordination: Align early with your TPA on timing and confirm when the audit package will be ready.
• Pre-Audit Planning: Set expectations and deadlines, agree on preferred communication methods (phone, email, Teams), identify key contacts in HR, payroll, and at your TPA, and establish the audit start date.
• Fieldwork Execution: Consider holding weekly status meetings, track open items, and keep communication consistent throughout.

Jessica also noted that most audits today are conducted remotely, which raises the stakes even further. When the audit team and the client aren’t in the same room, timely responses and regular updates in a format that works for everyone become even more essential. Delays in communication, however small, can slow the entire process down.

Consistency is what keeps things moving.

Organization and Documentation: Where Audits Are Won or Lost

Even with great communication, an audit can stall if the documentation isn’t organized and ready to go. Shannon identified a core set of items the audit team needs every single year. Having these ready upfront, she said, makes a significant difference:

• Internal control narratives
• Census data
• Payroll reports
• Year-to-date register
• W-3
• Audit package from the TPA
• Compliance testing results or draft Form 5500
• Plan documents, agreements, and any amendments
• Contribution timeliness schedules
• Regulatory communications and meeting minutes

If these aren’t ready, everything else gets delayed.

But Jessica was quick to add that it’s not just about having the documents — it’s about how they’re organized. A few specifics she called out:

• Your census should tie to your payroll. This ensures the audit team has a complete population to draw sample selections from.
• Communicate changes to plan documents or internal controls early. This allows the team to modify the audit approach from the beginning, rather than discovering gaps mid-fieldwork.
• The audit package should be complete when it arrives. An incomplete package prevents the team from building the trial balance and analyzing the audit approach.

Once those foundational pieces are in place, the audit moves into sampling — and that’s when the real audit work begins.

Timing Is Everything

One thing I always emphasize with clients: even small delays at the front end of the audit compound quickly. When the census, payroll records, and audit package are delayed, it doesn’t just push back the start of fieldwork — it compresses the time available for management to respond to our document requests. When we select a sample, we want the team to have adequate time to pull together the support.

Shannon reinforced this with a practical reminder: TPAs typically take seven to ten business days to provide documentation. If requests aren’t made early, that delay builds on itself fast.

Key Takeaways

Here’s what Jessica, Shannon, and I want every plan sponsor and administrator to walk away with:

• Be proactive with communication. Set expectations early between your team, the audit staff, and your TPA. Keep regular check-ins throughout the engagement.
• Get your core documents ready early. Make sure your data is accurate, tied together, and organized before the audit begins.
• Stay responsive during fieldwork. Quick, consistent responses keep momentum going and protect your team’s timeline.

And one final thought I’ll add as your host: audit readiness isn’t just about getting through this year’s audit. It’s about building a process that works year after year. When you invest the time upfront, you’re reducing stress, saving time, and ultimately improving the experience for your entire team.

Thank you to Jessica Hite and Shannon Cook for sharing their expertise on this episode of the Brown Edwards Benefits Buzz Podcast. If you found this helpful, feel free to share it or subscribe for more insights. Have a topic you’d like us to cover? Reach out — we’d love to hear from you.