AICPA Releases New Standard for Employee Benefit Plan AuditsDecember 18, 2018
Employee benefit plan administrators...you’ll want to read up on recent changes made to audit rules, including new requirements for engagement acceptance, audit risk assessment and more.
Attention employee benefit plan administrators…the American Institute for Certified Public Accountants (AICPA) Auditing Standards Board has voted to issue a new standard on audits of employee benefit plan financial statements. Reporting and performance requirements for practitioners auditing employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) will change for periods ending on or after December 15, 2020.
More on the new standard
The new standard is called Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, and will include a new report format for ERISA Section 103(a)(3)(C) audits, which in the past were known as limited-scope audits.
Plan sponsors will have to adhere to new procedures for an ERISA Section 103(a)(C)(3) audit as well as 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 solely ERISA plan financial statements, the standard would replace 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.
When will the standard be effective?
Most likely, the standard will be issued in the first half of 2019. Following issuance, the audit standard is expected to take effect no earlier than for audits of financial statements for periods ending on or after December 15, 2020.
Also in the first half of 2019, the ASB plans to vote on whether conforming amendments will be necessary for the new EBP audit standard following the board’s vote on the proposed auditor reporting standard.
Questions on the new standard and how you can best prepare? Contact any member of our Employee Benefit Plan Services Team.