An AICPA committee leader testified last week at the public hearing by the Department of Labor’s ERISA Advisory Council, “Beyond Plan Audit Compliance: Improving the Financial Statement Audit Process.”
The AICPA responded to the council’s request for recommendations on “actions the Secretary of Labor may take with respect to increasing the knowledge and understanding of the plan administrator that procures financial statement audit services, and on improving the procedures that such plan administrators implement in selecting an auditor.”
James Haubrock, CPA, chair of the executive committee of the AICPA Employee Benefit Plan Audit Quality Center (EBPAQC), outlined how the audit process can help plan administrators fulfill their fiduciary responsibilities by providing an opportunity and discipline to demonstrate due diligence by reviewing and enhancing plan governance, operations, records, internal control, compliance, and reporting.
Haubrock added that by actively participating in the audit process, plan administrators are better able to make proper assertions relevant to the amounts, transactions, and disclosures reported in the plan’s financial statements.
“The plan administrator can maximize the value of the audit process by hiring a quality auditor, actively [participating] in the audit process, and [using] the audit process to help fulfill the plan administrator’s fiduciary responsibilities and improve the effectiveness and efficiency of plan operations,” Haubrock said.
The EBPAQC is a voluntary membership center of more than 2,500 CPA firms that perform ERISA plan financial statement audits.
“Plan administrators must meet certain fiduciary responsibilities regarding plan financial reporting and operations. The AICPA welcomes the opportunity to share the CPA profession’s expertise in helping plan administrators take full advantage of the financial audit process,” said Ian MacKay, CPA, CGMA, director of Federal Regulatory Affairs–Public Accounting with the AICPA. “The EBPAQC has issued eight plan advisories to facilitate plan sponsors’, administrators’, and trustees’ understanding of their fiduciary and other responsibilities with respect to the plan audit and plan operations.”
In other advocacy news:
Recommendations on 2019–2020 IRS guidance priority list: The AICPA submitted more than 140 recommendations to the IRS in reference to the agency’s 2019–2020 Guidance Priority List. These recommendations relate to projects following the implementation of the law known as the Tax Cuts and Jobs Act of 2017, P.L. 115-97, and address tax issues affecting individuals, businesses, and exempt organizations.
Comments on FASB’s proposed changes to income tax disclosures: The AICPA’s Financial Reporting Executive Committee expressed support for FASB’s intent to modify disclosure requirements to result in more effective, decision-useful information about income taxes. However, the letter also noted a few matters of particular concern.
Response to independent Brydon Review into the quality and effectiveness of audit in the United Kingdom: The AICPA expressed support for the purpose of the Brydon Review and supported the position that most audits are conducted to a high quality and that the good should not be discarded in a search for the better. The letter also identified two key factors that should be considered in recommending any changes as a result of the review.
Urging U.S. Senate to confirm bilateral income tax treaties and protocols: In a letter to the U.S. Senate Committee on Foreign Relations, the AICPA stated that income tax treaties are vital to economic growth as well as U.S. trade and tax policy. The AICPA stated that to serve their intended purpose, tax treaties must be updated to stay current with developments in the global economy.
For more information on the AICPA’s advocacy activities, visit the CPA Advocate home page.
— Julia Woislaw is manager–Advocacy Communications for the AICPA. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, the JofA’s editorial director, at Kenneth.Tysiac@aicpa-cima.com.