New Auditing Standard for Employee Benefit Plans


In July 2019, the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended. SAS No. 136 has been codified in AU-C section 703, which is effective for audits of financial statements for periods ending on or after December 15, 2021 with early adoption permitted. Melton & Melton has decided to early adopt this standard for periods ending on or after December 15, 2020.

Why are there changes?

The goal of this standard is to enhance the quality of employee benefit plan audits and increase the value and transparency of the auditor’s report for ERISA plan financial statements.

What are the changes?

The standard includes new requirements in all phases of an ERISA plan financial statement audit. Some of the highlighted changes include:

  • Plan management’s acknowledgment of certain responsibilities such as: maintaining a current plan document, administering the plan and providing the auditor with a draft Form 5500 that is substantially complete.
  • Performing risk assessment procedures related to the plan instrument, plan tax status and prohibited transactions.
  • Communicating reportable findings to those charged with governance.
  • New form and content of the auditor’s report.
  • Limited-scope audits are now referred to as ERISA section 103(a)(3)(C) audits.
    • These audits will no longer be considered as having a scope limitation.
    • The auditor will have new performance and reporting requirements.
    • Management is responsible for determining that the entity preparing the certification is qualified under the DOL rules and regulations.

If you have any questions about SAS 136 or ERISA plan audits, contact Jennifer Patschke.