The American Institute of CPAs has taken another step toward improving the quality of audits of financial statements of employee benefit plans.
The institute said Monday its Auditing Standards Board voted to issue a new standard that addresses the auditor’s responsibility to form an opinion and report on the audit of financial statements of plans subject to the Employee Retirement Income Security Act of 1974.
The standard includes new requirements for engagement acceptance; audit risk assessment and response; communications with those charged with governance; and procedures for an ERISA section 103(a)(3)(C) audit.
Another requirement addresses considerations relating to the Form 550, the annual return and report for employee benefit plans.
AICPA has been developing a plan to improve plan audits since the Department of Labor issued a report in 2015 that identified serious deficiencies in 39% of the audits it examined.
The institute has also launched a certification program to better train CPAs on auditing employee benefit plans as part of its Enhancing Audit Quality initiative.
The Auditing Standards Board is expecting to consider whether conforming amendments to the new standard will be necessary once the board votes to issue the Proposed Statements on Auditing Standards Auditor Reporting and Related Amendments, which is expected to occur in the first half of 2019.
When ultimately finalized and issued, the standard is expected to be effective no earlier than for audits of financial statements for periods ending on or after Dec. 15, 2020.
