United States

RSM comments on proposed auditor reporting for plans subject to ERISA


In April, the American Institute of Certified Public Accountants Auditing Standards Board issued a proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, which, among other revisions, will provide more transparency regarding the scope of the responsibilities of management and the auditor when management imposes a limitation on the scope of the audit, as permitted under ERISA. The proposed SAS creates a framework for a new reporting model specific to employee benefit plans.

Regardless of the scope of the audit, the proposed SAS would require a by-product report of findings on specific plan provisions relating to the financial statements (included in the auditor’s report on the ERISA plan financial statements or issued as a separate report). In addition, this new report would be included in the Form 5500 filing, along with the auditor’s report on the financial statements. The proposed SAS also includes performance requirements that serve as a basis for this new reporting requirement. The procedures, which primarily were excerpted from the AICPA Employee Benefit Plans Audit & Accounting Guide (the Guide), are intended to leverage procedures performed as part of the financial statement audit; however, they would be required irrespective of the risk of material misstatement. This may result in additional work for firms that currently are not performing such procedures as described in the Guide. Therefore, we believe the proposed SAS will enhance the consistency and quality of the audit work performed relating to such provisions by codifying them into a standard.

The revisions in this proposed auditing standard may have significant implications for employee benefit plan audit and reporting. More than 100 comment letters were received by the Auditing Standards Board in response to this proposed SAS. RSM US LLP has issued a comment letter in which we stated that overall we agree it is important to provide better insight to the public regarding the scope of the responsibilities of management and the auditor in connection with audits of financial statements of employee benefit plans subject to ERISA. However, as explained more fully in our comment letter, we do not agree with the requirement to report findings from procedures performed on specific plan provisions relating to the financial statements attached to the Form 5500 as we believe it would be more appropriate for such findings to be reported to those charged with governance of the employee benefit plan.

For further information regarding the proposed standard, please see our article, Proposed reporting on financial statements of plans subject to ERISA. The exposure draft proposed that the SAS would be effective for audits of financial statements for periods ending on or after December 15, 2018.