In an effort to improve the communicative value and relevance of the auditor’s report, the American Institute of Certified Public Accountants’ Auditing Standards Board released an exposure draft last year of a proposed Statement of Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employees Benefit Plans Subject to ERISA. If formalized, the new standards will call for a whole new reporting model for audits related to Employee Retirement Income Security Act of 1974 (ERISA) plans for financial statement periods ending on or after Dec. 15, 2018.
Applying to audits of single-employer, multiple-employer and multiemployer plans, the standards require changes to be made to the form, as well as the content of the auditor’s report when management imposes a limitation on the scope of the audit. This comes on the heels of the Department of Labor (DOL) expressing concerns over the current wording related to limited scope auditor’s reports and disclaimer of opinion. The DOL believes it to a contributing factor to audit quality deficiencies due to the potential confusion regarding the auditor’s responsibilities in performing these limited scope engagements.
The new standards will come with a significantly expanded scope of information required to be disclosed in the auditor’s opinion letter for DOL limited-scope employee benefit plans audits. Aimed to address misconceptions regarding the extent of work required when a disclaimer of opinion is issued, all audit procedures performed will need to be included in the disclaimers going forward. Highlighted below are the differences between what language is expected on your credit union’s or community bank’s limited-scope ERISA plan auditor’s report now, and what you can expect to see there should the proposed standards go into effect.
Additional steps will be required to take place to address compliance with a number of the provisions the new standards stipulate. Doeren Mayhew’s credit union auditors and community bank auditors stand ready to work collaboratively with you to ensure your ERISA plan will stay off the DOL’s deficiency list and remain in compliance. Contact them today!
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