In January 2015, the Auditing Standards Board (ASB) created the Employee Benefit Plan Task Force (Task Force), whose goal was to improve the quality of employee benefit plan audits through strengthening of the auditor’s report. Changes to the auditor’s report were intended to better help the auditors understand their responsibilities as well as to provide users of the financial statements with additional information on what the auditors do.
Proposed Statement on Auditing Standards (SAS)
The ASB and Task Force are currently working on Proposed Statement on Auditing Standards (SAS), Special Considerations – Audits of Financial Statements of Employee Benefit Plans Subject to ERISA. While the ASB and Task Force determined that employee benefit plans would be scoped out of AU-C 700, Forming an Opinion and Reporting on Financial Statements, the proposed SAS includes many aspects of AU-C 700.
Much of the auditor’s report under the proposed SAS will look familiar; however, there are some new aspects to it. Highlights are below are some of these difference for limited and full-scope audits, including whether the changes apply only to limited or full-scope audits.
Basis for Disclaimer of Opinion would now be referred to Basis for Limitation on the Scope of the Audit and also contains some wording changes (limited scope only);
Management’s responsibility would be expanded to also include responsibility for determining that the limitation of scope is permissible as well as responsibility for administering the plan (for full-scope audit, management’s responsibility would still expand to include administering the plan);
Auditor’s responsibility would be expanded to include language regarding the procedures performed relative to investments (limited scope only);
Expanded language relative to supplementary information;
New language specific to the plan provisions, areas tested and any findings, if applicable; and
New language explaining the purpose of the report.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.