New Auditing Standard for Employee Benefit Plans

Published September 23, 2020 – As a result of the coronavirus pandemic, the AICPA Accounting Standards Board has decided to delay the effective date, by one year, for the Statement on Auditing Standards 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (SAS 136).  Auditors of employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) will be required to comply with SAS 136 for plan year ends after December 15, 2021. This new audit standard has the goal of addressing the Department of Labor’s concerns about poor audit quality over employee benefit plans primarily by firms that do not have significant experience with these types of audits.

SAS 136 provides more specific guidance in audit requirements of employee benefit plans. Specifically, the audit requirements cover the following topics:

  • Engagement acceptance;
  • Audit risk assessment and responses, including consideration of the plan’s provisions;
  • Communication of reportable findings to those charged with governance; and
  • Auditor’s responsibility regarding the ERISA required supplemental schedules.

A new audit report format from SAS 136 provides more information on the scope of the audit, responsibilities of the auditor as well as management’s responsibilities, and enhanced reporting relating to going concern. The limited scope audit report is also modified and referred as the “ERISA section 103(a)(3)(C) audit” and will have a two-pronged opinion that is based on the audit and on the procedures performed relating to the certified investment information. This audit standard also requires certain compliance findings to be communicated to those charged with governance over the plan.

This article is an excerpt from Dopkins Employee Benefits Newsletter.  To read the complete content, please click here.

For more information, please contact Jim Krupinski, CPA at jkrupinski@dopkins.com.

About the Author

James A. Krupinski CPA

Jim has 25 years of experience providing audit and consulting services to clients from a diverse range of industries. In addition to his many audit management responsibilities, he currently serves as the leader of the Firm's risk management services group. He has assisted his clients with performing risk assessments, evaluating and improving internal controls, developing fraud prevention programs and complying with the requirements of Sarbanes Oxley's assessment of internal controls over financial reporting requirements.

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