Employee benefit plan auditing rules to change

By Ken Tysiac

Reporting and performance requirements for practitioners auditing employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) will change under a new standard that the AICPA Auditing Standards Board (ASB) has voted to issue.

Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, will include a new report format for ERISA Section 103(a)(3)(C) audits, which formerly were known as limited-scope audits. The new standard will require new procedures for an ERISA Section 103(a)(C)(3) audit and will contain new considerations relating to Form 5500.

The standard will describe new requirements for engagement acceptance; audit risk assessment and response; and communications with those charged with governance.

For audits of ERISA plan financial statements only, the standard would apply in place of AU-C Section 700, Forming an Opinion and Reporting on Financial Statements, and paragraph .09 of AU-C Section 725, Supplementary Information in Relation to the Financial Statements as a Whole. The new standard also will amend various other AU-C sections in the AICPA Professional Standards.

The standard is expected to be issued when the ASB’s new auditor reporting standard is issued, most likely in the first half of 2019. Following issuance, the EBP audit standard is expected to take effect no earlier than for audits of financial statements for periods ending on or after Dec. 15, 2020.

The ASB plans to evaluate whether conforming amendments will be necessary for the new EBP audit standard following the board’s vote on the auditor reporting standard it has proposed. That vote is expected to be held in the first half of 2019.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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