The U.S. Labor Department's Employee Benefits Security Administration ("EBSA") published a study in May 2015 to analyze the quality of employee benefit plan audits performed by Certified Public Accounting ("CPA") firms. The study broke down the CPA firms into 6 strata based on the number of employee benefit plan audits performed on an annual basis.
These strata included firms performing 1 or 2 audits, 3 to 5 audits, 6 to 24 audits, 25 to 99 audits, 100 to 749 audits and firms performing 750 or more audits. 51% of all firms performing employee benefit audits fell into the first strata, performing only one or two audits, and 92% of all firms performing employee benefit audits performed fewer than 25 audits annually.
EBSA then reviewed a statistical sample of 400 audit engagements performed by 232 firms across the 6 strata. EBSA defines a major deficiency as a deficiency in audit standards, in which the overall quality of the audit is adversely affected. Findings showed that 76% of audits performed by firms performing one or two audits annually had major deficiencies. Moreover, the next strata, firms performing 3-5 audits annually, had major deficiencies in 68% of their audit engagements.