Employee benefit plan audits come with many technical requirements, but few decisions are as important as determining whether an ERISA 103(a)(3)(C) audit is appropriate for your plan. This option, formerly known as a limited scope audit, allows plan sponsors to rely on the certified investment information provided by a qualified institution. When used correctly, the certification election can streamline the audit process, reduce cost, and focus the auditor’s attention on areas that truly matter for compliance.
At Boyum Barenscheer, our Employee Benefit Plan Audit team helps plan sponsors understand when this election is beneficial, when it is not, and what steps ensure compliance with current AICPA and DOL requirements.
What is an ERISA 103(a)(3)(C) Audit
An ERISA 103(a)(3)(C) audit applies when a plan receives a valid certification from a bank or similar institution that meets Department of Labor criteria. This certification states that the investment information is complete and accurate. When the certification is valid and accepted by management, the auditor does not audit the certified investment information and instead focuses on the remaining financial statement areas and internal control processes.
The result is an audit that is often more efficient while still providing transparency for participants and regulatory agencies.
When the Certification Election Makes Sense
Many plans qualify for the ERISA 103(a)(3)(C) option, but it is not always the right choice. Below are situations where the election typically provides value.
- The Plan’s Investments Are Held by a Qualified Institution
If the trustee or custodian meets Department of Labor requirements and provides a formal certification, this is the first sign that the election may be beneficial. Large institutional custodians are well equipped to certify investment information, which gives the plan a reliable foundation for the audit.
- The Plan Sponsor Wants a More Efficient Audit
By removing the need to audit certified investment details, the auditor focuses on contributions, benefit payments, participant data, and internal processes. This often reduces audit hours and improves turnaround time.
- The Plan’s Investment Structure Is Complex
Plans that invest in pooled separate accounts, common collective trusts, or other sophisticated vehicles often benefit the most. These investments may be difficult and time consuming for auditors to evaluate. Certification shifts responsibility to the custodian, who has direct access to underlying valuation information.
- The Sponsor Understands Its Responsibilities
Even when electing an ERISA 103(a)(3)(C) audit, plan management must still ensure that:
The certification is valid and complete
• The institution is qualified under Department of Labor rules
• Non-investment information is accurate and well supported
When plan sponsors understand these duties and have strong internal processes, the election can be a very effective choice.
When a Certification Election May Not Be Appropriate
There are also situations where a standard audit may provide more clarity. Examples include:
- The custodian cannot or will not provide a Department of Labor compliant certification
• The certification does not cover all investments
• The plan holds hard to value assets that fall outside custodial oversight
• The sponsor is unsure whether it can accept responsibility for the certification
In these cases, a traditional audit ensures that all investment information is thoroughly reviewed.
How Boyum Barenscheer Supports the Certification Election
Our Employee Benefit Plan Audit group works closely with plan sponsors to evaluate whether an ERISA 103(a)(3)(C) audit is the right fit. We help by:
- Reviewing the custodian certification for compliance
• Confirming the institution meets Department of Labor requirements
• Advising on areas of the audit that remain subject to testing
• Identifying ways to strengthen internal controls and documentation
• Ensuring the audit report complies with the latest AICPA standards
Our goal is to help sponsors make informed decisions that protect plan participants while managing cost and complexity.
Final Thoughts
The ERISA 103(a)(3)(C) audit option can be an excellent choice for many employee benefit plans, offering efficiency without sacrificing regulatory confidence. The key is understanding when the election makes sense and partnering with an experienced audit team that can guide you through the requirements.
Boyum Barenscheer is committed to helping plan sponsors navigate these decisions with clarity, accuracy and confidence.
If you would like help determining whether a certification election is right for your plan, our team is here to support you. For more information contact us at info@myboyum.com.