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Investment Income Allocation

This article explains AuditMiner's Investment Income Allocation Workpaper

Purpose

The Investment Income Allocation workpaper is used to determine if investment income was properly allocated to participants. (AAG-EBP 5.132)

The workpaper performs an analytical review of the difference between 1) the participant return and the plan return, and 2) the participant return and the fund return, to verify a reasonable allocation of the investment income.

The fund return is obtained from Yahoo! Finance by calculating the rate of return with the historical opening price balance at the beginning of the plan year and the historical closing price balance at the end of the plan year. While the AuditMiner workpaper includes both the plan return and the published fund return, auditors typically choose to compare the participant return to just one, not both. The period tested for all investments is annual.

Sample

The workpaper will include the following information regarding the sample:

  1. Population Source: Participant Activity Detail Package
  2. Population Amount: Ending Balance from the Participant Activity Detail Package
  3. Population Count: Number of Participants reported on the Participant Activity Detail Package - Summary
  4. Sampling Unit: Individual Participant
  5. Seed Number: This number can be used to regenerate the sample selection
  6. Sample Methodology: Sample methodology chosen by auditor. See Sampling Considerations section.