Employee Benefit Plans
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Resources from the EBP Committee
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New safe harbor rule on employee contributions
U.S. Department of Labor issues final safe harbor rule on employee contributions to small pension and welfare plans
Employee Benefit Plan Fiduciaries and Fiduciary Responsibility 
An article written by Donna Massanova, an EBP Committee Member and a Principal with Parente Randolph, LLC in their Philadelphia office.
Commonly asked questions on EBP audits and more!
Brought to you by JoAnn Szupka, an EBP committee member and an Assurance Manager for BDO Siedman, LLC in their Philadelphia office.
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Common ERISA Audit Deficiencies
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The following are the more common audit deficiencies noted in DOL reviews and AICPA peer reviews.
- Planning—Inadequate audit planning and failure to assess the risk of material misstatement due to fraud.
- Internal Controls—Failure to document an understanding of internal controls, most often when a substantive audit is going to be performed. Inadequate use of Statement on Auditing Standards (SAS) No. 70, Service Organizations (AICPA, Professional Standards, vol. 1, AU sec. 324) reports; lack of testing when SAS No. 70 report is obtained.
- Contributions—No audit work performed and particularly multiemployer plans, failure to obtain adequate audit evidence for contributions back to contributing employers (multiemployer plans). Reliance on contribution reports is not enough.
- Insufficient payroll audit procedures—Failure to test elective deferrals.
- Investments—No work performed; failure to test end of year values (particularly hard-to-value assets); and improper use of limited scope certifications.
- Benefit payments—No audit work performed and inadequate auditing regarding eligibility of claims to be covered by the plan.
- Participant data—Insufficient testing of payroll data and failure to test eligibility, forfeitures, and allocations. In defined contribution plans with limited scope audits, failure of auditors to test the allocation earnings and gains/losses to participant accounts. Additionally, sample sizes too low and some firms have reduced their sample sizes selected for compliance and substantive testing to unacceptably low levels.
- Working paper documentation—Adequacy of audit documentation continues to be an issue. Only evidence of audit work having been performed is a sign off on an audit step without any supporting documentation.
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403(b) Plans—Tax-Sheltered Annuity Plans
A 403(b) TSA plan is a retirement plan offered by public schools and certain tax-exempt organizations. An individual’s 403(b) annuity can be obtained only under an employer’s TSA plan. Under U.S. Department of Labor (DOL) regulations issued on November 16, 2007, retirement plans sponsored under Internal Revenue Code section 403(b) and covered under the Employee Retirement Income Security Act of 1974 (ERISA) will be subject to the same reporting and audit requirements that currently exist for section 401(k) plans.
ERISA-covered 403(b) plans with 100 or more participants generally will be required to file audited financial statements beginning with their 2009 Form 5500 filing. 403(b) plans with fewer than 100 participants may be eligible to use abbreviated reporting forms without audited financial statements.
Revenue Procedure 2007-71 provides model language that may be used by organizations either to adopt a written plan to reflect the requirements of the final 403(b) regulations or to amend its 403(b) plan. It also provides transitional relief for contracts or custodial accounts that were issued or exchanged under Rev. Rul. 90-24 before January 1, 2009.
DOL Issues Transition Relief for 403(b) Plan Reporting and Audits
In response to concerns raised by the AICPA 403(b) Plan Task Force and administrators and service providers with the new Form 5500 reporting and audit requirements for section 403(b) plans, the U. S. Department of Labor’s Employee Benefits Security Administration (EBSA) has provided transition relief for 403(b) plans administrators that make good faith efforts to transition for the 2009 plan year to ERISA’s generally applicable annual reporting requirements. The relief is limited to the Form 5500 annual reporting requirements, including the independent audit requirement for large plans.
Commonly Asked Questions about 403(b) Plans
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FAS 157 Fair Value Measurements
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Fiduciary Responsibility
Meeting Your Fiduciary Responsibility
ERISA sets standards of conduct for those who manage an employee benefit plan and its assets.
Delinquent Filer Voluntary Compliance Program
The Delinquent Filer Voluntary Compliance (DFVC) Program is designed to encourage plan administrators to file overdue annual reports by letting them pay reduced penalties.
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Auditor Independence
Agencies will vary from each other in regards to auditor independence. The DOL rules apply to all employee benefit plan auditors and the AICPA rules also apply to those auditors who are members of the AICPA. Learn more by viewing the side-by-side comparison .
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Service Organization and Service Auditor’s Reports
The Auditing Standards Board (ASB) has proposed dividing the current Statement on Auditing Standards (SAS) for Service Organizations, SAS No. 70, into two separate statements. The proposed SAS Audit Considerations Relating to an Entity Using a Service Organization would only contain guidance for auditors auditing the financial statements of entities that use a service organization (user auditors). Guidance for auditor reporting on controls at a service organization (service auditors) would be contained in a new Statement on Standards for Attestation Engagements (SSAE), I. Both drafted statements are still under review and would not be effective for audits of financial statements ending before December 15, 2010.
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Multi-Employer Plans
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Relevant Articles & Publications
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The auditing of Employee Benefit Plans (EBP) is a very specialized and unique service performed by accountants. These audits have increasingly become the subject of examination by the Department of Labor. PICPA can guide you through the current issues related to EMP audits, offer access to courses that will provide you the knowledge to deal with these issues, and many other valuable resources.
- Employee Benefit Plans Conference
May 3-4 | Lancaster
Register by March 17 and save!
- PICPA Course Catalog
Take a look at the catalog for courses on nonprofits and governmental topics offered throughout the state.
- PICPA Webinars
Take advantage of quality professional education from the comfort of your desktop—it's convenient and affordable. Check out the upcoming list of hot topics!
- Customized On-site Training
Choose from hundreds of top-quality seminars—nearly every course in the PICPA catalog and many more—delivered directly to your place of business.
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Technical References & Resources
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FASB
- FASB Pronouncements
View statements of financial accounting standards, concepts, FASB interpretations, and technical bulletins.
U.S. Department of Labor
Employee Benefit Audit Quality Center
To help CPAs meet the challenges of performing quality audits in this unique and complex area, the AICPA has established the Employee Benefit Plan Audit Quality Center, a firm-based voluntary membership center for firms that audit employee benefit plans.
EFAST
EFAST is a system designed to simplify and expedite the receipt and processing of the Forms 5500/5500-EZ.
IRS
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Employee Benefit Plans Conference
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May 3-4 | Lancaster
View conference details and register today!
Click here to listen to the highlights for this year's EBP Conference from Roland J. O'Brien, CPA.
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Highlights from EBP Committee Chair Roland J. O’Brien
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"Educating auditors and plan sponsors of what constitutes a quality audit and the repercussions of having a substandard audit performed are paramount to the Committee." Read more from Roland.
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AICPA Employee Benefit Audit Quality Center
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To help CPAs meet the challenges of performing quality audits in this unique and complex area, the AICPA has established the Employee Benefit Plan Audit Quality Center, a firm-based voluntary membership center for firms that audit employee benefit plans.
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