1. Fraud schemes that could potentially occur; 

Your company's compliance with the US Department of Labor (DOL) and Internal Revenue Service (IRS) regulations is critical, as noncompliance penalties can be severe, and can potentially result in a plan disqualification.

Do you need an audit?

One area where there continues to be confusion among plan sponsors is the question of when a plan audit is required.

If a plan has over 100 eligible participants as of the beginning of the plan year, an audit is required. However, there is the 80-120 rule whereby a plan could forego the audit requirement. If the plan filed a Schedule I the prior year as a "small plan," and the number of eligible participants as of the beginning of the current year is under 120, the plan may elect to file in the current year as a "small plan," which means no audit is required. Once the number of eligible participants as of the beginning of the plan year exceeds 120 then the plan must have an audit. The plan would complete a Schedule H in its form 5500 for the current year as a "large plan."

Eligible participants as defined by the IRS in its form 5500 instructions, includes the following: (1) active participants, who are individuals currently employed by the plan sponsor, covered under the plan, and receiving credited service [this includes those eligible, even if they are not actually participating]; (2) retired or separated participants, who are individuals no longer working for the plan sponsor and are either receiving benefits or entitled to receive benefits; and (3) deceased participants, defined as individuals who have died and have one or more of their beneficiaries either receiving benefits or entitled to receive benefits.

We have seen a number of plan sponsors performing the count of plan participants using only those current employees actually participating in the plan. This is not correct, so be very careful when counting your eligible participants.

Follow your plan document

Employees at the plan sponsor who are responsible for the plan's operations and compliance with the DOL and IRS regulations should maintain a copy of the plan agreement (including any plan amendments) and be familiar with all the provisions in the agreement. Those individuals in the HR and payroll departments should fully understand the plan provisions, including eligibility, definition of compensation, distributions, loans, and so on. The actual operations of the plan need to mirror the provisions spelled out in the plan agreement. If operations do not mirror the provisions, or if any provisions are vague or unclear, we recommend that the plan sponsor consult with an ERISA attorney.

What if you are noncompliant?

If you believe your plan might have operational defects or noncompliance issues, prompt attention is warranted. Our experience with the DOL and IRS is that they expect plan sponsors to be proactive both in identifying operational defects or noncompliance, and then in correcting such occurrences in a timely manner. The IRS offers a system whereby a plan sponsor may voluntarily correct operational defects and noncompliance issues.

First, under this Employee Plans Compliance Resolution System (EPCRS), mistakes can be corrected in the following ways: (1) Self-Correction Program (SCP), which permits a plan sponsor to correct certain plan failures without contacting the IRS; (2) Voluntary Correction Program (VCP), which permits a plan sponsor to, any time before agency audit, pay a limited fee and receive IRS approval for correction of plan failures; and (3) Audit Closing Agreement Program (Audit CAP), which permits a plan sponsor to pay a sanction and correct a plan failure while the plan is under audit.

There are certain eligibility requirements that have to be met in order to use the SCP, but if you are able to use this program there is no fee. If the plan sponsor enters the VCP, there is a fee and certain documents have to be prepared and submitted to the IRS to obtain IRS approval. The fees vary, but for a plan with plan participants of between 101 and 500, the fee is $5,000.

Plan sponsors who feel they might have operational defects or noncompliance issues should contact an attorney who specializes in retirement plans and ERISA. Additionally, a CPA firm that specializes in audits of retirement plans should also be contacted to assist with efforts to determine the extent of any operational defects and noncompliance that might have occurred. 

Sorting through the abundances of social media sites can be a daunting task. What type of social media is best used to reach your target audience? What social media platform best represents the message your organization is sending? What are the demographics associated with the various types of social media?

What is Social Media? 

Unlike traditional media, social media centers on the opportunity for two-way communication. The users interact with the host by providing comments, sharing ideas and exchanging ideas. Users may also interact with each other directly and not involve the host. It is a latticework of communication and messaging, rather than the traditional one-way messaging found in advertising. 

What are the Options? 

Facebook 

Facebook is an online social networking service used to exchange messages, receive automatic notifications, and used to join common interest groups organized by workplace, schools, colleges or other characteristics, and categorize friends into lists. Facebook users exceed 1,230,000,000, and nearly half of the one billion plus users are between the ages of 18 and 34. Slightly more users are female. The "newsfeed" feature of Facebook allows users to update friends on statuses, happenings, and events; post pictures; and refer friends to other relevant websites.

Facebook may be best suited for reaching younger constituents in a less formal environment (such as campus recruiting) and is a way to show a different side of your organization (such as being engaged with coworkers in a more social setting).

Some drawbacks to Facebook are that it is time consuming to update and if it's not updated regularly, users may lose interest and stop checking the page.

LinkedIn 

LinkedIn is a social networking website for people in professional occupations. Founded in December 2002 and launched on May 5, 2003, it is mainly used for professional networking.

One purpose of the site is to allow registered users to maintain a list of contact details of people with whom they have some level of relationship, also known as "connections". Users can invite anyone (whether a site user or not) to become connected.

LinkedIn also supports the formation of interest groups and as of March 29, 2012 there were 1,248,019 such groups. The majority of the largest groups are employment related, although a very wide range of topics are covered mainly around professional and career issues. There is currently 128,000 groups for both academic and corporate alumni. 

There are approximately 259 million unique users of LinkedIn. Of these users, 93 million users are in the United States. LinkedIn allows users who post content to be perceived as subject matter experts and repost third party content.

LinkedIn shares some of the same challenges as Facebook. It is time consuming to manage and user training is required to adequately navigate the site. While a large majority of the professional community is on LinkedIn, few are using it to any real business advantage. Content pages for groups need to be updated regularly, which can be time consuming.

Twitter 

Twitter is an online social networking and microblogging service that enables users to send and read "tweets", which are basically text messages limited to 140 characters. Registered users can read and post tweets, while unregistered users have read only access. Users access Twitter through the website interface, Short Message Service (SMS) or mobile device app.

Twitter was launched in July 2006 and rapidly gained worldwide popularity, with 500 million registered users in 2012, who posted 340 million tweets per day. Twitter is now one of the ten most visited websites and has been described as the "SMS of the Internet." 

Tweets are publicly visible by default but senders can restrict message delivery to just their followers. Users can tweet via the Twitter website, compatible external applications (such as for smartphones) or by SMS available in certain countries. While the service is free, accessing it through SMS may incur phone service provider fees.

Users may subscribe to other users' tweets (this is known as "following") and subscribers are known as "followers" or "tweeps", a portmanteau of Twitter and peeps. The users can also check the people who are unsubscribing (or unfollowing) them on Twitter via various services. In addition, users have the capability to block those who have subscribed to follow them.

In a 2009 Time essay, technology author Steven Johnson described the basic mechanics of Twitter as "remarkably simple": 

As a social network, Twitter revolves around the principle of followers. When you choose to follow another Twitter user, that user's tweets appear in reverse chronological order on your main Twitter page. If you follow 20 people, you'll see a mix of tweets scrolling down the page: breakfast cereal updates, interesting new links, music recommendations, even musings on the future of education.

Users can group posts together by topic or type by use of "hashtags".  Hashtags are words or unspaced phrases prefixed with a "#" sign. Similarly, the "@" sign followed by a username is used for mentioning or replying to other users. Twitter has approximately 100,000,000 active users logging in at least once a month, with 50 million daily users. 53% of users are women and 47% men. 5% of users account for 75% of all activity and New York City has more Twitter users than any other city. 63% of users are under the age of 35.

Twitter is best for reaching a wide target audience, since messages are short. A wide variety of both social and technical topics is appropriate. Users can build a following and develop reputation for subject matter expertise.

Like other forms of social media, Twitter is time consuming. Tweets should be frequent and therefore, content is needed on a regular basis.

Summary

There are other social media venues, such as Pinterest, Instagram, MySpace, etc., but these applications do not necessarily lend themselves as traditional business applications. Focusing on Facebook, LinkedIn, Twitter, or some combination of these, should provide sufficient exposure to your target audience. With any social media endeavor, content is key and should be updated frequently. Social media updates can be quite time consuming, but when done in a thoughtful, well-planned manner, social media can help reach new audiences and provide a platform to introduce users to your organization.

Article written by Angela A. Fink, Principal

UHY LLP's National Not-For-Profit Practice offers comprehensive audit and assurance, tax planning and compliance and business advisory services to meet the unique, complex needs of nonprofit organizations.

These types of specialized services, which cut across the traditional service lines, demonstrate our philosophy of skilled professionals integrating industry expertise with technical services.