New ERISA 103(a)(3)(C) Audit Standard: Revamping the Limited Scope Audit and Reducing Disclaimers

SAS 136: New Audit Performance and Disclosure Duties, Evaluating Qualified Investment Information

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, October 22, 2019

Recorded event now available

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Program Materials

This webinar will provide audit professionals and employee benefit plan (EBP) sponsors with a critical early look at the new final AICPA Statements on Audit Standard (SAS) 136, with a particular focus on the new ERISA Section 103(a)(3)(C) audit rules and the alteration of the prior limited scope audit provisions. The panel will explain the additional requirements the new standard imposes on auditors and plan sponsors.

Description

In July 2019, the AICPA issued SAS 136, which makes significant changes to virtually every aspect of audits of EBPs covered by ERISA. The revision with the most significant impact on auditors is the effective replacement of the "limited scope audit" provisions with new Section 103(a)(3)(C) audit rules.

ERISA Section 103(a)(3)(c) permits a plan sponsor to request a limited scope audit of the ERISA plan, in which plan management may elect to exclude from the audit certain investment information held and certified to by a "qualified institution" such as a bank or insurance carrier. In such a limited scope audit, auditors issue a disclaimer of opinion on the financial statements. However, as the number of limited scope audits has increased, DOL studies have found a very high rate of audit deficiencies in limited scope audits.

In response to these deficiencies, the AICPA created the ERISA Section 103(a)(3)(C) audit provisions to impose new duties on auditors performing engagements in which plan management elects to exclude plan investment information. Instead of issuing disclaimers, auditors must issue an opinion that excludes the certified assets and must obtain and evaluate management representations as to which investment information is certified, and that the entity issuing the certification is a qualified institution under DOL regulations. The new rules significantly increase the auditor's responsibilities in performing audits under the Section 103(a)(3)(C) election.

Listen as our experienced panel provides a critical early look at the upcoming ERISA Section 103(a)(3)(c) audit rule and the changes to the "limited scope audit" allowances.

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Outline

  1. Current "limited scope audit" disclaimer rules
  2. New Statement on Auditing Standards (SAS) 136 issuance
  3. New ERISA Section 103(a)(3)(C) audit as a significant change to prior "limited scope audit"
    1. New duties to obtain management representations regarding investment information scope and certifying entity
    2. Assessing disclosures related to certified investment information
    3. Duties where an auditor becomes aware of deficiencies, inaccuracies, or incompleteness of certified investment information
    4. Duties to render an opinion on financial statement matters not directly relating to the certified investment information, including non-certified investment information and disclosures
  4. Other SAS 136 provisions
    1. New engagement acceptance requirements
    2. Provisions on risk assessment
    3. Duty to communicate with management or parties responsible for plan governance
    4. Receipt and examination of "substantially complete" Form 5500 before completion of a report
    5. Performance procedures
    6. The requirement to obtain management representations
  5. Implementation of new standards

Benefits

The panel will discuss these and other critical issues:

  • How the new ERISA Section 103(a)(3)(C) audit structure changes the practice of current "limited scope audits" where plan managment elects to have certified plan investment information excluded from the plan audit
  • Limited circumstances under which an auditor may issue a disclaimer and what information the auditor must obtain
  • New auditor duties to examine the substantially complete Form 5500 as part of the audit

Faculty

Kanter, Jessie
Jessie T. Kanter, CPA

Partner
Citrin Cooperman

Ms. Kanter has nearly 20 years of accounting experience, including audit and review services for privately held...  |  Read More

Peirce, Susan
Susan J. Peirce, CPA, MTax

Principal
Apple Growth Partners

Ms. Peirce leads the firm’s employee benefits audit and specialty services team. In addition to her audit work,...  |  Read More

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