AICPA Developing Auditor, Sponsor Advice Ahead of Critical DOL Study of Audits


Indications are that the Department of Labor's employee benefit plan audit study will bring bad news, so the American Institute of CPAs has been busy bolstering its efforts to strengthen the audit industry, AICPA officials told Bloomberg BNA.

The DOL has said that the study has found that about one-third of plans had problems with their audits, and in response to this, the AICPA has been making enhancements to its audit programs over the past year and a half, said Susan S. Coffey, senior vice president for public practice and global alliances.

The DOL conducted a study of Form 5500 filings to ferret out auditing problems, and although the agency's report hasn't been made public yet, “we've all heard that the audit quality study won't be positive,” said Ian A. MacKay, AICPA's director of federal regulatory affairs.

The DOL said that in its study of employee benefit plan filings, it has seen problems and errors in several areas, such as firms that lack experience and expertise in auditing plans subject to the Employee Retirement Income Security Act—dubbed “dabblers”—and in appraisals of employee stock ownership plans.

ERISA Section 103 requires that plan audits be conducted pursuant to the standards established by the accounting and auditing profession in the pronouncements that define generally accepted accounting principles and generally accepted auditing standards. The AICPA oversees the plan auditing profession.

The DOL conducted the study because there aren't uniform standards for who may perform a plan audit and what a quality audit must entail, which reduces the number of quality audits being performed, officials have said.

The DOL has “taken a great approach to the report,” and the AICPA is interested in how things such as training and experience relate to quality findings, MacKay said.

A DOL spokesman couldn't confirm for Bloomberg BNA when the agency will release the study.

Enhancing Audit Quality 

The AICPA is providing recommendations to both auditors and plan sponsors to improve audits, Coffey and MacKay said.

On the auditor side, the accountants' organization is working on recommendations that will address competence and due care; auditing and quality control standards, guidance, tools, learning and resources; peer review; and ethics.

For plan sponsors, the AICPA provides advice on how to hire a quality auditor, an important point because it's a fiduciary function.

The DOL also provides advice on selecting plan auditors.

Sponsors of all sizes need to be aware of their obligations, and “they all should get the value of a good audit,” MacKay said.

Excerpted from a story that ran in Pension & Benefits Daily (04/24/2015).

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