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Proposed Statement on Auditing Standards (SAS): Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA

The AICPA has recently released an exposure draft which would significantly impact the auditing and reporting on employee benefit plans that are subject to the Employee Retirement Income Security Act (ERISA).  The exposure draft is in response to concerns over the quality of employee benefit plan audits by the Chief Accountant of the Department of Labor (DOL).  The AICPA working with the staff of the Department of Labor among others formed a task force.  The result of the deliberations of the task force is the exposure draft.  The proposed effective date is for audits of ERISA plan financial statements ending on or after December 15, 2018.  Some of the more significant proposed changes are outlined below.

  • Required audit procedures and a new report on findings of the procedures performed. The procedures are required irrespective of risk assessment or other planning decisions made by the audit team.  The report can be included as part of the standard audit report or can be a separate report to those charged with governance of the plan.
  • Full scope audit report changes
    • Additional paragraph disclosing management’s responsibilities including:
      • Maintaining current plan instrument and plan amendments
      • Administering the plan
      • Determining plan transactions are presented and disclosed in accordance with the plan document.
      • Maintaining sufficient plan records
      • Determining what benefits are due or will be due to participants
    • Expanded opinion on the required supplemental schedules which must accompany the Form 5500. The expanded opinion will include whether the form and content of the supplemental schedules are presented in accordance with the DOL’s Rules and Regulations for Disclosure under ERISA.
    • Emphasis of matter paragraph required in certain situations to highlight items that are disclosed in the financial statements.
  • Limited Scope audit report changes to provide better transparency on the audit procedures performed.
  • Required audit procedures that must be performed on certified investment information as part of a limited scope audit.
  • Additional engagement acceptance procedures which contain acknowledgements by management for certain responsibilities regarding financial reporting and includes an acknowledgement that the Form 5500 will be provided to the auditor prior to filing.

The comment period on the exposure draft ends in August 2017 and Calibre CPA Group plans to draft a response to the proposed standards and encourage others to do the same.

Written by Jacqueline M. Dunn, CPA | Partner



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