Significant Changes Proposed to EBP Audit Reporting
In an effort to improve communication value, audit quality and relevance of the auditor’s report, the AICPA Auditing Standards Board (ASB) has issued an exposure draft proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA. The exposure draft will significantly affect and alter the way Employee Benefit Plan audits are performed and reported on. This new model will focus on a better explanation of the responsibilities of management and the auditors.
The proposed statement changes include, but are not limited to the following topics:
-New engagement acceptance requirements and written representations
-Auditor’s report changes including the following:
- Expanded management and auditor responsibilities descriptions
- A new basis for limitation on the scope of the audit section
- An other-matter paragraph on ERISA required supplemental schedules, including an opinion on form and content of the schedules
- Reporting on findings on plan provisions relating to financial statements
- Additional procedures and considerations relating to the Form 5500 filing
-Required audit procedures regarding investment information for which a certification has been provided by a bank or similar institution
-Requirement to report findings from procedures performed on specific plan provisions relating to the financial statements (either included in the auditor’s report on the ERISA plan financial statements or issued as a separate report), other than when clearly inconsequential
-Required emphasis-of-matter paragraphs
The effective date for this new proposed SAS is anticipated to be for plan years ending on or after December 15, 2018. The ASB is aware that the document may change practice and is eager to gather input about the effect on CPA firms, preparers and other interested parties. Comments and discussion will be posted on www.aicpa.org, as part of their meeting agenda materials.
For additional information, please reach out to our EBP Partner, Adam Stanard.