The AICPA has released an exposure draft outlining proposed standards for audits of employee benefit plans subject to the Employee Retirement Income Security Act (ERISA). The standards come two years after the Department of Labor (DOL) issued a report which identified 39% of the audits examined contained major deficiencies with to one or more relevant Generally Accepted Auditing Standards (GAAS) requirements which would lead to rejection of a Form 5500 filing, putting $653 billion and 22.5 million plan participants and beneficiaries at risk. As a result, the AICPA had been asked by the Chief Accountant of the Department of Labor to examine the auditor reporting model for these plans and where there could be improvements. The exposure draft is the result.
The proposal would make several significant amendments to existing standards and would contain many of the same requirements already outlined in current standards. In addition, however, the new standard would also contain:
- Specified procedures for investments when the ERISA-permitted audit scope limitation is imposed (including an evaluation of disclosures to be provided).
- A change in the form and content of the auditor’s report for ERISA-permitted audit scope limitation so that the focus includes transparency of work performed and a better description of management and auditor responsibilities.
- Required emphasis-of-a-matter paragraph when certain situations occur (outlined in the SAS).
- Required procedures and the reporting of findings for certain elements of the plan document.
- Required procedures relating to the Form 5500.
The AICPA extended the comment period on the proposal through Sept. 29, 2017. If implemented, its proposed effective date would be for periods ending on or after December 15, 2018.
If you are interested in more information on this exposure draft or ERISA audits, contact your MarksNelson professional.