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For many CPA firms, Employee Benefit Plan (EBP) and nonprofit (NFP) audits are no longer routine compliance engagements. Regulatory expectations continue to evolve, audit quality remains under scrutiny, and staffing pressures are making it increasingly difficult to deliver engagements efficiently during peak periods.
In 2026, firms performing an employee benefit plan audit or managing NFP audit compliance responsibilities must navigate a complex environment shaped by ERISA requirements, ongoing SECURE 2.0 implementation, updated federal guidance for nonprofits, and heightened expectations around audit documentation and reporting. At the same time, clients expect timely service, accurate reporting, and proactive guidance on emerging compliance risks.
For employee benefit plans, requirements under SAS No. 136 continue to influence audit execution and reporting, while Form 5500 filing obligations remain a critical deadline for both plan sponsors and auditors. Nonprofit organizations are adapting to updated Single Audit thresholds and evolving funding requirements, creating new considerations for firms supporting nonprofit audit preparation and compliance efforts.
Adding to these challenges, CPA firms continue to face talent shortages, growing workloads, and increased pressure to adopt new technologies. As engagement complexity rises, many firms are evaluating how to maintain audit quality while managing capacity constraints.
This article explores the key developments affecting ERISA audit compliance and nonprofit audit requirements in the USA, the most common challenges firms face in 2026, and practical strategies for preparing audit teams for a demanding year ahead.
The Employee Benefit Plan Audit Landscape in 2026
The regulatory environment surrounding employee benefit plan audits continues to evolve, requiring CPA firms to stay current with changing compliance expectations and audit standards. As plan sponsors adapt to legislative updates and increased oversight, auditors are expected to perform more robust procedures, maintain stronger documentation, and provide greater assurance around plan operations and financial reporting.
For firms providing Employee Benefit Plan (EBP) Audit Support, understanding the key requirements shaping the 2026 audit cycle is essential for delivering high-quality engagements and helping clients remain compliant
1. ERISA Audit Requirements Continue to Drive Audit Obligations
Under the Employee Retirement Income Security Act (ERISA), retirement plans that meet applicable large-plan filing requirements generally must include audited financial statements with their annual Form 5500 filing. While the 100-participant threshold is commonly associated with audit requirements, plan classification rules and reporting provisions can affect whether an audit is required.
An employee benefit plan audit extends beyond the review of financial statements. Auditors are expected to evaluate participant data, contributions, distributions, investments, administrative expenses, and plan operations to determine whether financial information is fairly presented and required disclosures are complete.
2. SAS No. 136 Has Raised the Bar for Audit Quality
Several years after its implementation, SAS No. 136 continues to influence how firms approach ERISA audit compliance.
The standard introduced enhanced responsibilities for auditors, including more rigorous risk assessment procedures, expanded communication requirements with plan management, and updated reporting standards. It also strengthened expectations around evaluating certifications provided by custodians and trustees.
The standard has increased expectations around planning, documentation, auditor communications, and risk assessment procedures. As regulators continue to emphasize audit quality, firms are expected to apply a structured and risk-focused approach throughout the engagement lifecycle.
3. Form 5500 Deadlines Remain a Critical Compliance Milestone
For calendar-year plans, July 31, 2026 remains the standard filing deadline for Form 5500. Plan sponsors that file Form 5558 on time may generally extend their filing deadline until October 15, 2026.
Because the audit report is a required component of the filing process for many plans, audit readiness directly impacts a sponsor’s ability to meet regulatory deadlines.
Late or incomplete Form 5500 filings can result in significant regulatory penalties and corrective actions. To reduce filing risks and avoid delays, many CPA firms encourage plan sponsors to begin audit preparation well in advance of the reporting deadline.
4. SECURE 2.0 Continues to Influence Plan Operations
While many SECURE 2.0 provisions have already taken effect, implementation challenges continue to surface throughout 2026.
Plan sponsors are working through requirements related to:
- Catch-up contribution provisions
- Employee eligibility tracking
- Automatic enrollment requirements
- Plan amendment deadlines
- Participant communication obligations
These changes affect not only plan administration but also audit procedures. Auditors must understand how sponsors are implementing new requirements and whether supporting documentation demonstrates compliance.
As a result, SECURE 2.0 remains an important consideration during audit planning and risk assessment.
5. Determining the Appropriate Audit Type
Another key area of focus involves determining whether a plan qualifies for an ERISA Section 103(a)(3)(C) audit, formerly referred to as a limited-scope audit.
This determination affects:
- Certification requirements
- Audit procedures performed
- Auditor reporting responsibilities
- Documentation expectations
Plans that qualify for an ERISA Section 103(a)(3)(C) audit must obtain appropriate certifications from qualified institutions, while plans that do not qualify may require more extensive audit procedures.
Given the documentation requirements involved, firms should evaluate audit eligibility early in the engagement process.
6. Common Compliance Risk Areas for EBP Audits
Although every plan is unique, regulators continue to identify several recurring compliance concerns.
Some of the most common issues include:
- Late participant contribution deposits
- Inaccurate participant eligibility tracking
- Inconsistent Form 5500 reporting
- Errors in distributions and loans
- Incomplete audit documentation
- Investment valuation concerns
- Related-party and party-in-interest transactions
Many of these issues originate from operational processes rather than accounting errors, making early communication between auditors and plan sponsors especially important.
For firms evaluating how to prepare for EBP audits in 2026, the most effective strategies remain consistent: engage clients early, establish standardized audit procedures, address documentation requests proactively, and monitor regulatory developments that may affect plan administration and reporting requirements.
7. EBP Audit Readiness Checklist
For CPA firms, maintaining ERISA audit compliance in 2026 requires a combination of technical expertise, early planning, and consistent execution. As regulatory expectations continue to evolve, firms that invest in strong audit methodologies, staff training, and proactive client communication will be better positioned to manage risk, support compliance, and deliver high-quality audit outcomes.
Nonprofit Audit Requirements USA: What CPA Firms Need to Know
While employee benefit plan audits continue to evolve, nonprofit organizations are navigating their own set of regulatory and reporting challenges. Changes to federal grant compliance requirements, varying state audit thresholds, and increasing expectations around financial transparency are creating a more complex environment for both nonprofits and the CPA firms that serve them.
For firms supporting nonprofit clients, understanding current nonprofit audit requirements USA is essential for managing compliance risks, improving audit readiness, and helping organizations meet the expectations of regulators, grantors, donors, and governing boards.
1. The Single Audit Threshold Has Increased
One of the most significant recent developments affecting the nonprofit sector is the increase in the federal Single Audit threshold from $750,000 to $1 million in federal expenditures. The revised threshold applies to fiscal years beginning on or after October 1, 2024, making 2026 the first full audit cycle in which many organizations are operating under the updated requirements.
As a result, organizations that expend $1 million or more in federal awards during their fiscal year are generally subject to Single Audit requirements under Uniform Guidance. Unlike a standard financial statement audit, a Single Audit also evaluates compliance with federal program requirements and internal controls over federal awards.
For CPA firms, this change requires careful planning, particularly when clients receive funding from multiple federal programs or pass-through entities.
2. Audit Requirements Extend Beyond Federal Funding
Federal expenditure thresholds are only one factor that may trigger a nonprofit audit.
Many organizations obtain audited financial statements because of:
- State regulatory requirements
- Grantor or funding agency requirements
- Lending agreements
- Board policies or organizational bylaws
- Donor expectations
As a result, nonprofits should evaluate audit obligations holistically rather than relying solely on federal funding levels.
3. State Audit Thresholds Continue to Vary
Unlike federal requirements, nonprofit audit requirements vary significantly by state.
Examples of commonly cited state thresholds include:
*State audit requirements may depend on charitable registration rules, fundraising activity, organizational structure, or other state-specific provisions. Organizations should review current state regulations to determine their specific obligations.
4. Financial Reporting Remains a Core Compliance Requirement
Accurate financial reporting remains central to effective NFP audit compliance.
Most nonprofit organizations prepare four primary financial statements:
- Statement of Financial Position
- Statement of Activities
- Statement of Cash Flows
- Statement of Functional Expenses
These reports provide donors, grantors, regulators, and board members with critical information about an organization’s financial condition, operating results, liquidity, and use of resources.
Maintaining complete supporting documentation for these statements is often one of the most important aspects of successful nonprofit audit preparation.
5. Common Challenges in Nonprofit Audit Preparation
Many nonprofit organizations operate with lean finance teams and limited administrative resources, creating challenges throughout the audit process.
Common issues include:
- Incomplete grant documentation
- Delayed account reconciliations
- Weak documentation of donor restrictions
- Revenue classification errors
- Inconsistent expense allocations
- Limited segregation of duties
- Delays in financial reporting
Addressing these issues before fieldwork begins can improve audit efficiency and reduce the likelihood of audit adjustments or compliance findings.
6. Managing Restricted Funds Requires Strong Controls
One of the most common compliance challenges in the nonprofit sector involves managing donor-restricted funds.
Organizations must maintain documentation supporting:
- The purpose of restricted contributions
- Spending activity against restrictions
- Remaining restricted balances
- Releases from restriction
Failure to properly track restricted funds can affect financial statement accuracy and create compliance concerns during the audit process.
7. Revenue Classification Remains a Common Risk Area
Another recurring challenge involves distinguishing between contribution revenue and exchange transactions.
For example, revenue generated through program services may require different accounting treatment than donor contributions. Incorrect classification can affect financial statement presentation, reporting accuracy, and compliance assessments.
Given the variety of funding sources used by nonprofit organizations, revenue recognition remains an important area of audit focus.
8. Nonprofit Audit Readiness Checklist
As compliance expectations continue to evolve, successful NFP audit compliance depends on strong financial reporting processes, proactive documentation practices, and early audit preparation. CPA firms that help clients identify and address issues before fieldwork begins are often better positioned to improve audit efficiency, reduce disruptions, and support successful engagement outcomes.
Top Compliance Challenges CPA Firms Face in 2026
As regulatory expectations continue to evolve, CPA firms are being asked to deliver higher-quality audits while managing increasingly complex compliance requirements. For firms providing Audit & Assurance Services for CPAs, maintaining technical accuracy and audit quality has become just as important as meeting engagement deadlines.
Whether performing an employee benefit plan audit or supporting nonprofit organizations, firms must navigate changing regulations, heightened scrutiny, and recurring risk areas that can impact both compliance outcomes and audit quality.
1. Audit Quality Remains a Key Regulatory Focus
Employee benefit plan audits continue to receive significant attention from regulators.
The U.S. Department of Labor’s most recent audit quality study found that approximately 30% of reviewed EBP audits contained at least one deficiency. While this represents an improvement compared to previous studies, the findings highlight the ongoing challenges firms face in maintaining consistent audit quality.
Perhaps more importantly, the study found a strong correlation between audit quality and firm experience. Firms that perform a higher volume of employee benefit plan audits generally demonstrate lower deficiency rates than firms that perform only a small number of engagements annually.
2. DOL Audit Quality Findings
- 30% EBP audits reviewed contained at least one deficiency
- 18% Major deficiency rate among firms performing 100+ EBP audits annually
- 25% Major deficiency rate among firms performing 25+ EBP audits annually
- 55% Major deficiency rate among firms performing fewer than 25 EBP audits
- 70% Deficiency rate among firms performing only 1–2 EBP audits
These findings reinforce the importance of specialized training, standardized methodologies, and sufficient engagement experience when performing employee benefit plan audits.
3. Common Challenges in Employee Benefit Plan Audits
Many deficiencies identified by regulators stem from recurring operational and compliance issues rather than highly technical accounting matters.
Some of the most common challenges in employee benefit plan audits include:
- Late participant contribution deposits
- Errors in participant eligibility tracking
- Inconsistent Form 5500 reporting
- Incomplete or insufficient audit documentation
- Distribution and loan processing errors
- Investment valuation and reporting concerns
- Related-party and party-in-interest transactions
- Internal control deficiencies
These areas often require auditors to evaluate not only financial records but also plan administration processes and supporting documentation.
As a result, firms performing EBP engagements must maintain a thorough understanding of both accounting requirements and ERISA compliance obligations.
4. Regulatory Scrutiny Continues to Increase
Regulators continue to place significant emphasis on accurate reporting, timely filings, and audit quality.
Form 5500 filings are subject to review by both the Department of Labor and the IRS, making consistency between audited financial statements and regulatory filings particularly important.
Late filings, incomplete information, or unresolved compliance issues can expose plan sponsors to penalties, corrective actions, and additional scrutiny. This places additional pressure on CPA firms to ensure audits are completed accurately and on schedule.
5. Common Nonprofit Compliance Challenges
While nonprofit organizations face different regulatory requirements, many of their compliance challenges are equally complex.
One recurring issue involves revenue classification. Determining whether revenue should be recognized as a contribution, grant revenue, or an exchange transaction requires careful analysis and proper documentation.
Another common challenge involves managing donor-restricted funds. Organizations must maintain clear records demonstrating how restricted contributions are received, tracked, spent, and reported.
Additional nonprofit compliance challenges often include:
- Incomplete grant documentation
- Weak internal controls
- Delayed financial reporting
- Inconsistent expense allocations
- Limited segregation of duties
- Inaccurate functional expense reporting
When these issues are not addressed proactively, they can create audit delays, increase the likelihood of adjustments, and complicate compliance reporting.
6. Documentation and Internal Controls Continue to Matter
Across both employee benefit plan and nonprofit audits, strong documentation remains one of the most important factors influencing audit quality.
Incomplete supporting schedules, missing approvals, inconsistent reconciliations, and weak control documentation can significantly increase audit risk and engagement complexity.
For CPA firms, developing standardized procedures and encouraging clients to address documentation requirements early can help improve efficiency while reducing compliance risks throughout the audit process.
As regulatory expectations continue to evolve, firms that invest in specialized expertise, strong audit methodologies, and proactive client communication will be better positioned to navigate the growing compliance demands of both EBP and nonprofit audit engagements.
Operational Pressures Are Reshaping Audit Delivery
While regulatory compliance remains a primary concern, many CPA firms are finding that operational challenges have become just as significant as technical audit requirements. Growing engagement complexity, talent shortages, evolving technology expectations, and seasonal workload spikes are creating capacity constraints across the profession.
For firms managing both employee benefit plan and nonprofit audit engagements, balancing quality, turnaround times, and resource availability has become increasingly difficult.
1. Talent Shortages Continue to Impact CPA Firms
The accounting profession continues to face ongoing workforce challenges. Many firms report difficulty recruiting and retaining qualified professionals, particularly in specialized service areas such as audit and assurance.
Several factors are contributing to these staffing pressures, including:
- Fewer accounting graduates entering the profession
- Increased retirement of experienced CPAs
- Growing demand for specialized audit expertise
- Competition for experienced accounting and audit talent
As a result, firms often find themselves managing increasing workloads with limited resources, particularly during peak reporting periods.
2. Audit Complexity Is Increasing
Today’s audit engagements often require more than financial statement testing.
Employee benefit plan audits may involve evaluating plan operations, participant data, eligibility requirements, investment activity, and regulatory compliance considerations. Nonprofit audits frequently require auditors to assess grant compliance, donor restrictions, revenue recognition, and functional expense allocations.
At the same time, regulatory expectations around documentation, risk assessment, and audit quality continue to evolve.
As engagement requirements become more complex, firms must dedicate additional time to planning, review, quality control, and staff training.
3. Technology Adoption Is Creating New Demands
Technology continues to transform the audit profession.
Many firms are investing in:
- Audit automation tools
- Data analytics platforms
- Workflow management systems
- Document collaboration technologies
- Artificial intelligence and machine-learning applications
While these investments can improve efficiency and enhance audit quality, implementation requires significant time, training, and ongoing process improvements.
For many firms, the challenge is no longer deciding whether to adopt new technology, but determining how to integrate it effectively while maintaining productivity and service quality.
4. Seasonal Workloads Create Capacity Constraints
One of the most persistent challenges facing audit practices is workload seasonality.
Audit demand often concentrates around key reporting deadlines, including:
- Form 5500 filing deadlines
- Single Audit reporting deadlines
- Year-end financial reporting cycles
- Tax season support activities
These periods can create sharp spikes in workload that are difficult to address through permanent staffing alone.
As engagement volumes increase, firms may face difficult decisions between hiring ahead of demand, relying on overtime, delaying work, or seeking additional support resources.
5. Balancing Growth and Audit Quality
Many firms are experiencing growth in audit demand while simultaneously navigating resource limitations.
As engagement portfolios expand, maintaining consistent quality becomes increasingly dependent on effective resource allocation, standardized processes, and efficient workflow management.
Without sufficient capacity, firms may face:
- Extended turnaround times
- Increased staff burnout
- Reduced scheduling flexibility
- Delays in client deliverables
- Greater pressure on managers and reviewers
These operational pressures are prompting many firms to reassess how audit work is performed and how resources are deployed across engagements.
For firms seeking sustainable growth, the challenge is not simply completing more work. It is developing a delivery model that supports audit quality, compliance, scalability, and long-term profitability while continuing to meet client expectations.
Prepare for EBP and NFP audits with confidence in 2026.
How CPA Firms Can Prepare for EBP and NFP Audits in 2026
As compliance requirements become more complex and staffing pressures continue across the profession, preparation is becoming one of the most important factors influencing audit quality and engagement efficiency.
For firms managing employee benefit plan and nonprofit audits, successful execution often depends on actions taken months before fieldwork begins. Early planning, standardized processes, staff training, and proactive client communication can help reduce compliance risks while improving engagement outcomes.
1. Begin Audit Planning Early
One of the most effective ways to improve audit readiness is to start planning well before key filing deadlines.
For employee benefit plan engagements, many industry specialists recommend engaging auditors and beginning audit preparation several months before the Form 5500 filing deadline. Early planning provides additional time to:
- Gather participant and plan data
- Review internal controls
- Identify potential compliance issues
- Resolve documentation gaps
- Coordinate with third-party service providers
Starting early can help firms avoid the bottlenecks that often occur as filing deadlines approach.
2. Request SOC 1 Reports as Early as Possible
Many employee benefit plans rely on third-party administrators, custodians, payroll providers, and other service organizations.
Obtaining SOC 1 reports from these providers is often a critical component of the audit process. However, these reports are not always immediately available and may take several weeks to obtain.
Requesting SOC 1 reports early in the engagement lifecycle can help prevent unnecessary delays and provide auditors with sufficient time to evaluate relevant controls and supporting documentation.
3. Standardize Audit Processes and Documentation
As engagement volumes grow, consistency becomes increasingly important.
Firms that rely on standardized procedures, templates, and documentation requirements are often better positioned to:
- Improve audit efficiency
- Reduce rework
- Support quality control efforts
- Simplify staff training
- Enhance engagement consistency
This is particularly valuable for firms managing multiple EBP and nonprofit engagements during compressed reporting periods.
4. Invest in Technical Training
Regulatory requirements continue to evolve across both employee benefit plan and nonprofit audits.
Audit teams should remain informed about developments related to:
- ERISA compliance requirements
- SECURE 2.0 implementation
- Form 5500 reporting obligations
- Single Audit requirements
- Nonprofit financial reporting standards
- Audit quality expectations
Ongoing education helps firms maintain technical competency while reducing the risk of compliance issues and audit deficiencies.
5. Strengthen Client Communication
Many audit delays originate from incomplete information, missing documentation, or unresolved client questions.
Establishing clear communication timelines and expectations can help firms obtain required information more efficiently and improve overall engagement management.
Best practices often include:
- Providing documentation request lists early
- Scheduling planning meetings in advance
- Establishing milestone deadlines
- Communicating status updates throughout the engagement
A proactive approach can significantly reduce last-minute issues and improve the client experience.
6. Develop Audit Readiness Checklists
Structured checklists can help both audit teams and clients prepare for fieldwork more effectively.
For employee benefit plan audits, an EBP audit checklist may include:
For nonprofit engagements, readiness checklists often focus on:
7. Prioritize Quality Before Deadlines
Meeting deadlines remains important, but maintaining audit quality is equally critical.
As regulatory scrutiny continues and engagement complexity increases, firms should ensure that resource planning, review processes, and quality control procedures receive the same attention as scheduling and delivery targets.
Firms that prepare early, maintain consistent methodologies, and invest in staff development are often better positioned to manage compliance requirements, improve efficiency, and deliver high-quality audit outcomes throughout the 2026 audit cycle.
Why CPA Firms Are Expanding Capacity with Offshore Audit Support
As employee benefit plan and nonprofit audits become more demanding, many CPA firms are reassessing how they allocate resources across audit engagements. Increasing regulatory requirements, staffing shortages, seasonal workload fluctuations, and rising client expectations have made capacity management a growing priority for firms of all sizes.
In response, many firms are incorporating Offshore audit support for CPA firms into their delivery models to improve scalability, strengthen operational flexibility, and support consistent audit execution.
1. Addressing Capacity Challenges Without Overhiring
One of the most significant challenges facing audit practices is balancing workload fluctuations throughout the year.
Demand often increases sharply around:
- Form 5500 filing deadlines
- Single Audit reporting periods
- Year-end financial reporting cycles
- Tax season support activities
Building permanent staffing capacity for peak workloads can be difficult, particularly when engagement volumes vary significantly throughout the year.
As a result, many firms are exploring flexible resourcing models that allow them to scale support based on workload demands while maintaining operational efficiency.
2. Supporting Audit Teams Across the Engagement Lifecycle
Offshore professionals can assist with a variety of audit-related activities, allowing in-house teams to focus on planning, review, client communication, and technical decision-making.
Depending on firm requirements, support may include:
- Audit workpaper preparation
- Lead schedule preparation
- Financial statement drafting
- Documentation organization
- Account reconciliations
- Testing support
- Administrative audit procedures
This approach can help firms manage engagement volume more effectively while preserving valuable time for senior auditors and managers.
3. Supporting Employee Benefit Plan Audit Engagements
For firms providing Employee Benefit Plan (EBP) Audit Support, workload demands often intensify as Form 5500 deadlines approach.
Tasks such as documentation preparation, testing support, participant data organization, and workpaper preparation can require substantial time and resources.
By utilizing outsourcing EBP audit preparation services, firms can often improve workflow efficiency while allowing engagement leaders to focus on higher-value activities such as risk assessment, audit strategy, review procedures, and client advisory discussions.
4. Enhancing Nonprofit Audit Delivery
Nonprofit audits frequently involve extensive documentation requirements, grant-related reporting, restricted fund analysis, and financial statement preparation.
Additional support resources can help firms manage these requirements more efficiently, particularly during periods of increased engagement activity.
When integrated effectively, offshore professionals can operate as an extension of the firm’s existing audit team while following established methodologies, quality standards, and engagement procedures.
5. Protecting Audit Quality While Improving Scalability
Successful offshore support initiatives are not simply about reducing costs.
For many firms, the primary objective is creating additional capacity while maintaining quality, consistency, and responsiveness.
An effective support model can help firms:
- Improve resource utilization
- Reduce turnaround times
- Increase scheduling flexibility
- Support engagement growth
- Reduce pressure on internal teams
- Maintain focus on quality control and review processes
As audit requirements continue to evolve, scalable resource strategies are becoming an increasingly important component of long-term practice management.
6. Building a Sustainable Audit Delivery Model
The challenges facing CPA firms in 2026 are unlikely to disappear in the near future. Regulatory expectations continue to increase, competition for talent remains strong, and clients expect both technical excellence and timely service.
As a result, firms are increasingly evaluating how technology, process improvements, and strategic resourcing can work together to support sustainable growth.
For many firms, offshore support has become one component of a broader strategy designed to strengthen audit & assurance solutions, improve operational resilience, and create the capacity needed to serve clients effectively in an increasingly complex audit environment.
Conclusion
The compliance landscape for employee benefit plan and nonprofit audits continues to evolve in 2026. From ongoing SECURE 2.0 implementation and ERISA audit requirements to updated nonprofit audit thresholds and increasing audit quality expectations, CPA firms are navigating a more demanding environment than ever before.
At the same time, staffing shortages, seasonal workload spikes, and growing engagement complexity are placing additional pressure on audit teams. Firms that prioritize early planning, standardized processes, technical training, and effective resource management will be better positioned to maintain compliance, deliver quality engagements, and support client needs.
For firms seeking additional audit capacity, Unison Globus provides specialized support through its Audit & Assurance Services for CPAs, including Employee Benefit Plan (EBP) Audit Support, nonprofit audit assistance, workpaper preparation, testing support, and other audit-related functions. By serving as an extension of your team, we help firms manage workload fluctuations, improve operational efficiency, and maintain focus on high-value client and review activities.
Looking to strengthen your EBP and NFP audit capacity in 2026? Contact Unison Globus to learn how our offshore audit support solutions can help your firm scale with confidence.
