So how do you prepare for an audit? Sohn recommends 12 best practices.

Maintain a stand-alone ERISA policy, a one page notice that cross references your other policies and shows that you are thoughtful about ERISA and what your enhanced standard of care is for your plan clients.
Track all client accounts that are subject to ERISA.
Formalize your procedure for 408(b)(2) notices and updates.
Maintain model client documents that reflect current law. Review disclosures, RFP materials and make sure you have updated 404(a)(5) and 408(b)(2) notices.
Make sure all client service agreements are signed.
Develop a model response to plan clients for routine 5500 information requests. Make sure that what you disclose in your Form 5500 matches your 408(b)(2) disclosures.
For fiduciary services, ensure compensation is level. Are advisors or service personnel acting as functional advisors even if they don't hold themselves out as a fiduciary? Any fees for services, variable compensation, revenue sharing and shareholder service payments, all of that would have to be offset or levelized against direct compensation. They want to make sure you don't have the potential to increase your compensation by the advice you give to your clients.
Referrals are fully disclosed and don't violate prohibited transaction rules.
Confirm that your affiliated and third party subcontractors are fully disclosed and do not violate prohibited transaction rules.
Provide ongoing education and training for your employees.
Include ERISA items in any internal audits.
Benchmarking. Look at the fees others are charging and make sure yours are reasonable.

Next: Get your high-level liaison ready

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