Attention Plan sponsors, the American Institute of Certified Public Accountants (AICPA) has released an exposure draft outlining proposed standards for audits of employee benefit plans subject to the Employee Retirement Income Security Act (ERISA).

Audit deficiencies

In 2015 the Department of Labor, or DOL, issued a report which revealed that 39% of the audits examined contained major deficiencies—Check out more in our blog, 'DOL Letter Addresses Quality of Employee Benefit Plan Audits' . Because of this, the DOL’s Chief Accountant asked the AICPA to examine the audit reporting for these plans and where improvements could be made—hence, the exposure draft.

Wait...what’s an exposure draft exactly? This is a document released by the Financial Accounting Standards Board (FASB) for public commentary on proposed new accounting standards.

What would the proposal accomplish?

Though the proposal retains many of the same requirements already outlined in the current standards, it proposes several significant amendments to the existing standards.
The new standard, if approved, will contain:

• Modifications (in content and form) to the auditor’s report for ERISA-permitted audit scope limitation. These changes are aimed at better focusing the audit on transparency of work performed and providing a better description of management and auditor responsibilities.
• Requirements to report findings from procedures performed on specific plan provisions.
• Specified procedures for investments when the ERISA-permitted audit scope limitation is imposed and an evaluation of related disclosures.
• Required emphasis-of-a-matter paragraph in the opinion when certain situations occur.
• Considerations relating to the Form 5500 filing.

Can you submit comments on the exposure draft?

Yes, the AICPA is accepting comments on the proposal until Friday, September 29, 2017. If implemented, its proposed effective date would be for periods ending on or after December 15, 2018.

Interested in more information on this exposure draft or ERISA audits in general? Contact our Employee Benefit Plan Audit Specialists.