Published August 8, 2021 – The American Institute of Certified Public Accountants’ Auditing Standards Board recently released Statement on Auditing Standards No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (SAS 136). After a one-year effective date deferral due to the COVID-19 pandemic, auditors of employee benefit plans with a plan year ending on or after December 15, 2021 will be required to comply with SAS 136. The overarching objective of SAS 136 is to address the Department of Labor’s (DOL) growing concerns about poor audit quality over employee benefit plans and firms who do not hold significant experience with these types of specialized audits.
In this effort, SAS 136 specifically addresses, expands upon, and, in some instances, revises certain aspects of the following topics as they relate to audits of employee benefit plans subject to ERISA:
- Engagement acceptance.
- Audit risk assessment and response, including consideration of relevant plan provisions.
- Communications of reportable findings with those charged with governance of an employee benefit plan.
- The auditor’s responsibilities relating to the ERISA-required supplemental schedules and the Form 5500.
- The form and content of the related auditor’s report, including enhanced reporting related to going concern considerations.
Additionally, audits previously referred to as “limited-scope audits” are now labeled “ERISA section 103(a)(3)(C) audits.” It should be noted that the SAS does not amend ERISA itself, and plan management’s ability to elect such an audit whereby certain investment information held and certified by a qualified institution is excluded remains unchanged. An ERISA section 103(a)(3)(C) audit report will contain a two-pronged opinion that is based on the results of the audit and on procedures performed on certified investment information.
This article is an excerpt from Dopkins Employee Benefits Newsletter.
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About the Author
Justin S. Renaud CPA
Justin is a member of Dopkins Assurance Services Group. He helps provide management with financial information by researching and analyzing accounts and preparing financial statements.