28 Sep 2021 SAS 136: Changes for Employee Benefit Plans and Their Auditors
Authored by RSM US LLP |
- Scope limitations. Plan management may make an election under ERISA Section 103(a)(3)(C) to exclude from the audit certain investment information a qualified institution holds and certifies. This election will no longer be considered a scope limitation for the auditor. Under SAS 136, when plan management makes such an election, this former “limited-scope audit” now will be referred to as an “ERISA section 103(a)(3)(C) audit.”
- Engagement acceptance. As a precondition of engagement acceptance, the auditor will need to obtain plan management’s acknowledgment that it understands its responsibility for:
- Maintaining a current plan instrument, including all plan amendments;
- Determining whether an ERISA Section 103(a)(3)(C) audit is permissible, if elected, and that the investment information is (a) prepared and certified by a qualified institution and (b) appropriately measured, presented and disclosed; and
- Providing a substantially complete draft Form 5500 prior to the dating of the auditor’s report.
- Audit risk assessment and response, including the auditor’s consideration and testing of relevant plan provisions.
- Procedures for an ERISA Section 103(a)(3)(C) audit. Under SAS 136, the auditor will need to:
- Evaluate management’s assessment of whether the entity issuing the certification is a qualified institution under U.S. Department of Labor rules and regulations;
- Identify which investment information is certified; and
- Perform certain procedures on the certified investment information.
- Written communications of reportable findings with those charged with governance.
- Auditor reporting. SAS 136 revises the auditor’s report to provide more transparency regarding the scope and responsibilities of management and the auditor. It also requires additional language regarding the ERISA-required supplemental schedules. Further, if plan management makes the election under ERISA Section 103(a)(3)(C), the auditor’s report for an ERISA section 103(a)(3)(C) audit will include a two-part opinion addressing (a) the amounts and disclosures not covered by the certification and (b) the information covered by the certification.
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This article was written by RSM US LLP and originally appeared on 2021-09-28.
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