In recent years, the quality of employee benefit plan audits has been a focus of the Department of Labor and the American Institute of Certified Public Accountants (AICPA) Peer Review program. One of the most frequent deficiencies was found to be the improper use of the ERISA limited-scope exemption because the certification did not meet the requirements in the Title 29 U.S. Code of Federal Regulations Part 2520.103-8 for an acceptable certification. In an effort to address this deficiency, the AICPA’s Employee Benefit Plan Audit Quality Center has issued a tool that plan administrators may use to not only understand their responsibilities for determining the adequacy of a certification, but also to assist in identifying common deficiencies in limited-scope certifications.
The determination of whether or not a limited-scope audit can be performed rests with plan administrators. A few requirements of an acceptable limited-scope certification include the certification being signed, either manually or electronically, by someone authorized to represent the qualified institution; it being specific to the plan subject to the audit; and it certifying both the accuracy and completeness of the investment information as of, and for the period ended, on the financial statement date. In addition, the plan administrator must ensure that the financial statements and note disclosures related to investment information are prepared in accordance with accounting principles generally accepted in the United States. If the plan administrator discovers that insufficient year-end valuation procedures were performed, the plan administrator may request the qualified certifying institution to recertify or revise the certification for such investments at their proper year-end values or to omit such investments from the certification.