The Importance of Internal Controls in Financial Reporting and Safeguarding Plan Assets
What is internal control and why is it important to your plan?
Internal control reduces the risk of asset loss and helps to ensure that plan information is complete and accurate, financial statements are reliable, and laws and regulations are obeyed. It is a process designed to offer reasonable assurance concerning objective accomplishments in the reliability of financial reporting. Under the Employee Retirement Income Security Act (ERISA), a plan sponsor, administrator, or trustee is considered a fiduciary subject to certain responsibilities and possible liabilities.
This advisory* introduces:
- Why Internal Control Is Important to Your Plan
- What is Internal Control?
- How to Establish Cost-Effective Controls
- Monitoring Your Controls is Critical
- Auditor Communications of Internal Control Deficiencies
- How Your Auditor Can Help You Improve the Effectiveness of Your Plan’s Control
- Examples of Selected Controls for Employee Benefit Plans