ASB addresses ERISA plan auditor reporting, other information in annual reports

By Ken Tysiac

In separate standards issued Wednesday, the AICPA Auditing Standards Board (ASB):

  • Changed requirements for auditor reporting and performance on ERISA plan financial statements.
  • Amended rules for the purpose of improving transparency regarding auditors’ responsibilities related to other information included in annual reports other than the audited financial statements and the auditor’s report thereon.

The ASB issued Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, and SAS No. 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports.

SAS No. 136 is the result of an effort to enhance the communicative value and transparency of the auditor’s report for ERISA plan financial statements, and to include performance requirements specific to auditing ERISA plans. Effective communication in auditor’s reports has been a major focus for auditing standard setters, including the ASB, for the past few years.

In May, the ASB issued SAS No. 134 and SAS No. 135 to enhance the communicative value of the auditor’s report and to make generally accepted auditing standards more consistent with standards issued by the International Auditing and Assurance Standards Board and the PCAOB.

SAS No. 136 creates new reporting requirements and performance requirements for the highly specialized audits of ERISA financial statements. The standard creates a new AU-C Section 703 in the AICPA Professional Standards.

The new ERISA audit reporting standard changes the form and content of the auditor’s report when management elects to exclude from the audit certain investment information held and certified by a qualified institution, as permitted by ERISA. This new report format will apply to engagements that formerly were known as “limited-scope” audits and now are called “ERISA Section 103(a)(3)(C)” audits.

New requirements in SAS No. 136 also include items related to:

  • Engagement acceptance.
  • Audit risk assessment and response, and consideration of plan provisions.
  • Forming an opinion on ERISA plan financial statements.
  • Reporting on ERISA-required supplemental schedules.
  • The auditor’s communication with those charged with governance.
  • Written representations to be requested from management.
  • Considerations for filing Form 5500, Annual Return/Report of Employee Benefit Plan.
  • Reporting on ERISA-required supplemental schedules.

“In the ASB’s continued efforts to improve the transparency of auditor reporting in general, this new SAS specifically addresses the significant public interest associated with audits of employee benefit plans subject to ERISA and was undertaken in consultation with the U.S. Department of Labor,” AICPA Chief Auditor Bob Dohrer, CPA, CGMA, said in a news release.

The SAS takes effect for audits of ERISA plan financial statements for periods ending on or after Dec. 15, 2020, and early implementation is not permitted. SAS No. 136 applies only to audits of employee benefit plans that are subject to ERISA.

Other information standard

SAS No. 137 provides transparency related to the auditor’s responsibility for other information included in an annual report when the auditor has obtained all the other information at the date of the auditor’s report on the financial statements. The standard supersedes SAS No. 118, Other Information In Documents Containing Audited Financial Statements, as amended and codified in AU-C Section 720.

The ASB expects the standard to reduce diversity in practice with respect to information and documents that are considered to be within the scope of the standard. Form 5500 is not considered an annual report for purposes of SAS No. 137.

SAS No. 137 requires the auditor to read and consider the other information included in the annual report because other information that is inconsistent with the financial statements or the auditor’s knowledge obtained in the audit may indicate that a material misstatement of either the financial statements or the other information exists. This could undermine the credibility of the financial statements and the auditor’s report.

Other information may include amounts or other items that are intended to be the same as, to summarize, or to provide more detail about amounts or other items in the financial statements, and other amounts or items about which the auditor has obtained knowledge in the audit. Other information also may include nonfinancial information.

“SAS No. 137 is another piece of the Auditing Standards Board’s efforts in the public interest to enhance transparency in reporting related to the auditor’s responsibilities for nonfinancial statement information included in annual reports,” Dohrer said.

SAS No. 137 takes effect for audits of financial statements for periods ending on or after Dec. 15, 2020, and early implementation is not permitted.

Click here to find AICPA information and resources about auditing standards issued in 2019.

Ken Tysiac ( is the JofA’s editorial director.


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