Upcoming Changes to Audit Reports for EBPs

On April 20, 2017, the AICPA’s Auditing Standards Board (ASB) released an exposure draft for the Proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA.

The proposed SAS is specific to audits of financial statements of employee benefit plans (EBPs) subject to the Employee Retirement Income Security Act of 1974 (ERISA), and would be codified as AU-C section 703 in the AICPA Professional Standards.

If the proposed SAS is released as final, it will apply to audits of single, multiple, and multiemployer plans subject to ERISA. Additionally, it would replace AU-C section 700, Forming an Opinion and Reporting on Financial Statements, for audits of ERISA plan financial statements only. As well as, paragraph .09 of AU-C section 725, Supplementary Information in Relation to the Financial Statements as a Whole. The proposed SAS would take effect for audits of financial statements for periods ending on or after December 15, 2018.

Some of the proposed amendments stated in the exposure draft include: Engagement acceptance requirements in addition to AU-C section 210; New required procedures and reporting requirements when the ERISA-permitted audit scope limitation is imposed; Expanded descriptions of management’s responsibilities; Required emphasis -of-matter paragraphs; and Considerations relating to the Form 5500 filing, which the auditor’s report accompanies.

Furthermore, the ASB has identified nine issues for consideration in which they specifically request feedback:

  1. Required Procedures When an ERISA-Permitted Audit Scope Limitation is Imposed
  2. The Form and Content of the Auditor’s Report on ERISA Plan Financial Statements with the ERISA-permitted Audit Scope Limitation
  3. Modifications to the Opinion in the Independent Auditor’s Report
  4. Required Emphasis-of-Matter Paragraphs
  5. Reporting Internal Control Deficiencies
  6. Certain Requirements for Audits of ERISA Plan Financial Statements and Related Required Report on Specific Plan Provisions Relating to the Financial Statements
  7. Required Procedures Relating to the Form 5500
  8. Proposed New Reporting Standard and Amendments to Other AU-C Sections
  9. Proposed Effective Date

Comments must be submitted by August 21, 2017. To view the exposure draft visit:

https://www.aicpa.org/research/exposuredrafts/accountingandauditing/downloadabledocuments/ 20170420a_ed_ebp_reporting.pdf.