May 16, 2017
Over the last few years there has been additional attention paid to the level and quality of employee benefit plan audits. While most benefit plan sponsors have likely not noticed a difference in their audit process, the Department of Labor and other regulatory agencies have uncovered a series of startling statistics highlighting several issues with audit quality. According to the 2015 report, Assessing the Quality of Employee Benefit Plan Audits, it was discovered that 39% of audits reviewed had one or more major deficiency. It was also discovered that 17% of the audit reports reviewed were not in compliance with required reporting and disclosure rules. The information uncovered in the study created a need for regulatory agencies and others to quickly address these issues. In late April, the AICPA Auditing Standards Board (ASB) issued new regulations meant to address these issues. To help clients, prospects and others understand the proposed changes, Wilson Lewis has provided a summary below.
The proposed changes known as, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, outlines several changes to how plan audits are conducted. The new proposed standards address an auditor’s responsibilities when forming and reporting an opinion on the condition of a benefit plan’s financial statement. Highlights of the proposal include:
The changes will likely require plan auditors to expand their testing in certain areas with the results of the testing and information reviews being reported in the auditor’s report which accompanies IRS Form 5500. It’s clear from the new proposed standards, that benefit plan auditors will be required to conduct a more thorough set of audit standards, especially if it is a limited scope audit engagement. It’s important to note that the new standards, if approved, will become effective for plan audits ending on or after December 15, 2018.
Contact Us
It’s clear from the new proposed regulations that significant changes are coming to audit procedures which must be performed for plan audits. While it is likely some changes will be made prior to the proposal becoming final, it’s a good indicator of changes that plan sponsors can expect to see in the coming years. If you have a question about the proposal or need assistance with your employee benefit plan audit, Wilson Lewis can help. For additional information call us at 770-476-1004, or click here to contact us. We look forward to speaking with you soon.