Inside a DOL Audit

In the 12 months ending Oct. 1, 2012, more than 300 EBSA investigators in 10 regional offices closed 3,566 investigations, 72.1% of which resulted in a total of $1.27 billion in fines. About one-quarter of those investigations resulted from the approximately 240,000 inquiries that come from participants. Understanding the process that investigators follow in conducting an audit can take the fear out of it and produce better results. Jennifer E. Eller of the Groom Law Group reviews that process and provides insights on what to expect and how to best respond. The process begins with a request for documents followed by an interview — all documented in a manual available on EBSA’s website. The investigator then recommends whether action should be taken, which could include a Voluntary Compliance Letter (which seems to be common). Generally, EBSA will issue a press release after a settlement. While the 2012 fee disclosure rules may have generated little response from participants initially, they do provide with valuable information to EBSA investigators, who can decipher even the most arcane disclosures. The rules will also probably generate more inquiries to EBSA — even if they haven’t done so for providers. Savvy advisors will try to establish good relations with their local EBSA investigators so the audit process goes more smoothly.