Feb 25, 2019
The AICPA Auditing Standards Board (ASB) recently voted to approve Statement on Auditing Standards, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (EBP SAS) as a final standard.
Certain conforming amendments related to the form and content of the auditors reports in the EBP SAS may still be necessary, based on the results of the ASB's deliberations of proposed SASs, Auditor Reporting, and related amendments. The Auditor Reporting SASs are expected to be issued in the first half of 2019. As such, the EBP SAS is also expected to be issued, pending completion of the Auditor Reporting SASs, in the first half of 2019.
When issued (after the above mentioned conforming changes are made), the EBP SAS is expected to be effective no earlier than for audits of financial statements for periods ending on or after December 15, 2020. Early adoption is not permitted. The EBP SAS includes transitional implementation reporting guidance upon initial adoption of the SAS.
Another significant change is that an audit performed pursuant to ERISA section 103(a)(3)(C) will no longer be referred to as a "limited scope audit" but rather going forward referred to as an "ERISA Section 103(a)(3)(C) audit." The EBP SAS includes new performance and reporting requirements specific to ERISA section 103(a)(3)(C) audits.
The ERISA SAS notes that an ERISA Section 103 (a)(3)(C) audit is unique to EBPs and is not considered a scope limitation, therefore the auditor would no longer issue a modified opinion (typically a disclaimer of opinion) due to information that is certified by a qualified institution. Instead, the report provides a two-pronged opinion that is based on the audit and on the procedures performed relating to the certified investment information. It provides an opinion on whether the information not covered by certification is presented fairly, and an opinion on whether the certified investment information in the financial statements agrees to or is derived from the certification.