EBPAQC Alert No. 272 


    AICPA
     
    EBP Audit Resources
           
      AICPA
    May 22, 2012
    EBPAQC Alert #272
     
     
    In This Alert
       
    EBPAQC Resources
    AICPA Technical Resources
    Important Changes to the 2012 AICPA EBP Audit and Accounting Guide
    Audit Risk Alert, Employee Benefit Plans Industry Developments—2012
    EBP SSAE No. 16/SOC 1 Report Practice Aid
    AICPA Employee Benefit Plan Technical Questions and Answers
    Technical Assistance
    Additional Resources
       
    EAlerts (archived)
    Live Forum webinars (archived)
    Resource Centers
    Tools
    Stay Informed
       
    We welcome any suggestions or questions - please send them by e-mail at EBPAQC@aicpa.org.
       
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    Members of the Employee Benefit Plan Audit Quality Center (EBPAQC) may only reproduce and distribute EBPAQC EAlerts internally within the firm to other Center member firm personnel as part of the firms' professional services. For information about permission to copy any part of these documents for redistribution or inclusion in other work, please click on the copyright notice at the bottom of the page or phone the AICPA copyright permission hotline (919) 402-4031.
     
    Dear Center Members
     
    This Alert summarizes EBPAQC and AICPA resources available to assist you in performing your upcoming employee benefit plan audits. The Alert also highlights important changes in the 2012 AICPA EBP Audit and Accounting Guide, and significant issues discussed in the 2012 Audit Risk Alert, Employee Benefit Plans Industry Developments.
    EBPAQC Resources
    As a Center member, you have access to all the tools and resources on the EBPAQC website, including 14 Audit and Accounting Resource Centers, the Member-to-Member Discussion Forum, 45 archived webinars, archived EAlerts, Topix Primers, and >Plan Advisories.

    The Center has developed several new tools and resources in the past year, and updated some existing resources, including the Fraud in Employee Benefit Plans Resource Center and the Plan Advisory, Valuing and Reporting Plan Investments. Popular new tools and resources include: The Center has also prepared the Common EBP Audit Deficiencies that summarizes the most common audit deficiencies found in EBP audits by the Department of Labor and the AICPA Peer Review program. This document is intended to help EBP audit practitioners be alert to these areas and be aware of the related key audit issues.

    Click here for a comprehensive summary of the EBPAQC tools and resources.
    AICPA Technical Resources
    If you need to research a technical accounting or auditing issue, many times the answer can be found by consulting the AICPA Audit and Accounting Guide, Employee Benefit Plans (updated as of January 1, 2012) and the AICPA Audit Risk Alert, Employee Benefit Plans Industry Developments—2012. The AICPA also has practice aids and other tools to assist you with your EBP audits.
    Important Changes to the 2012 AICPA EBP Audit and Accounting Guide
    There are some important changes to the 2012 EBP Audit Guide this year to incorporate new audit standards and clarify certain matters that may affect your employee benefit plan audits, including:
    • SAS No. 118, Other Information in Documents Containing Audited Financial Statements (AICPA, Professional Standards, AU section 550). SAS 118 requires the auditor to perform certain procedures when other information is included in documents containing the financial statements and the auditor's report thereon. Accordingly, for a limited scope audit, because the DOL supplemental schedules are included with the audited financial statements, the requirements in AU section 550 apply. In addition, this standard is applicable to the information in the Form 5500 that is filed with the audited financial statements.
    • SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole (AICPA, Professional Standards, AU section 551). SAS 119 requires certain audit procedures be performed, in addition to the procedures performed during the audit of the financial statements, in order for the auditor to report on whether the supplemental schedules are fairly stated in all material respects in relation to the financial statements as a whole. SAS 119 also requires the auditor to obtain certain written representations from management, and sets forth the reporting requirements for the form and content of the report on the supplemental schedules. Note that paragraph 13.11 in the 2012 EBP Audit Guide includes an example of the new report language on the supplemental schedules in a full scope audit.
    • Clarification in the auditor's report for a limited scope engagement that the supplemental schedules are presented for the purposes of additional analysis and are not a required part of the financial statements but are required by the DOL's Rules and Regulations for Reporting and Disclosure under ERISA. The illustration in paragraph 13.37 of the Guide includes an additional sentence that illustrates this change. It is recommended in the Guide that this additional sentence be included in the limited scope audit report even though AU section 550 does not contain specific reporting requirements.
    Other changes include revisions to reflect the issuance of:
    • AICPA Statement on Standards for Attestation Engagements (SSAE) No. 16, Service Organizations (AICPA, Professional Standards, AT sec. 801).
    • FASB Accounting Standards Update (ASU) No. 2011-04, Fair Value Measurement (FASB ASC 820).
    • FASB ASU No. 2010-06, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements (FASB ASC 820).
    • ASU No. 2010-25, Plan Accounting—Defined Contribution Pension Plans (Topic 962): Reporting Loans to Participants by Defined Contribution Pension Plans (a consensus of the FASB Emerging Issues Task Force).
    Click here to order the 2012 EBP Audit Guide.
     
    Audit Risk Alert, Employee Benefit Plans Industry Developments—2012
    The 2012 Employee Benefit Plan Audit Risk Alert provides information to assist you in achieving a better understanding of the business, economic, and regulatory environments in which your plan clients operate. It also helps you identify the significant risks that may result in the material misstatement of financial statements and provides information about emerging practice issues and current accounting, auditing, reporting, and regulatory developments. The "On the Horizon" section of the alert provides information on developing issues that may have a significant effect on the employee benefit plan industry in the near future.

    Significant new accounting and auditing guidance and emerging issues addressed in the alert include:
    • FASB Accounting Standards Update No. 2011-04, Fair Value Measurement, including a discussion of the new measurement and disclosure requirements and related auditing considerations.
    • SAS No. 118, Other Information in Documents Containing Audited Financial Statements, including information about when this standard applies.
    • SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole, including a discussion of required audit procedures, written representations and reporting requirements for the form and content of the report on the supplemental schedules, and an illustrative explanatory paragraph.
    • Changes to the suggested language in limited scope auditor's reports to clarify that the supplemental schedules are presented for the purposes of additional analysis and are not a required part of the financial statements but are required by the DOL's Rules and Regulations for Reporting and Disclosure under ERISA.
    • New fee disclosure regulations under ERISA Section 408(b)(2), including considerations for plan auditors.
    • The changes in service auditor Reports as a result of the issuance of SSAE No. 16.
    Click here to order the 2012 EBP Audit Risk Alert.
    EBP SSAE No. 16/SOC 1 Report Practice Aid
    The AICPA has developed a practice aid, Using an SSAE No. 16 Service Auditor's Report (SOC 1 Report) in Audits of Employee Benefit Plans, to provide auditors with guidance on using SOC 1 reports in their audits of employee benefit plans. It provides practice tools such as:
    • Audit Program: Auditing the Financial Statements of an Employee Benefit Plan That Uses a Service Organization
    • Planning Checklist for Audits of Employee Benefit Plans That Use a Service Organization
    • Documentation of Use of a Type 2 Service Auditor's Report in an Audit of an Employee Benefit Plan's Financial Statements
    Click here to order the practice aid.
    AICPA Employee Benefit Plan Technical Questions and Answers
    The AICPA has developed technical questions and answers on a variety of employee benefit plan-related accounting, auditing and reporting topics. The questions and answers are not sources of established authoritative accounting principles or auditing standards, rather they are nonauthoritative aids based on selected practice matters and have not been approved, disapproved, or otherwise acted upon by any senior committee of the AICPA. They are included in the AICPA publication, Technical Practice Aids. To date, the AICPA has issued 57 EBP-related questions and answers under the following topics:
    • TIS Section 6930.01-.02 — Employee Benefit Plans
    • TIS Section 6931.01-.17—Financial Statement Reporting and Disclosure—Employee Benefit Plans
    • TIS Section 6932.01-.10—ERISA Reporting and Disclosures
    • TIS Section 6933.01-.10—Auditing Employee Benefit Plans
    • TIS Section 6934.01-.04—Limited-Scope Audits—Employee Benefit Plans
    • TIS Section 6935.01-.02—SSAE No. 16 Reports—Employee Benefit Plans
    • TIS Section 6936.01-.02—Auditing Defined Contribution Plans
    • TIS Section 6937.01—Auditing Defined Benefit Plans
    • TIS Section 6938.01-.08—Auditing Health and Welfare Plans
    • TIS Section 6939.01—Auditor's Reports—Employee Benefit Plans
    Most recently, technical questions and answers at TPAs 6931.13-.17 were issued to provide nonauthoritative guidance on health and welfare plan accounting and reporting for reimbursements received under the Patient Protection and Affordable Care Act's Early Retirement Reinsurance Program. The TPAs describe the ERRP and cover matters such as how to report the ERRP reimbursement in the health and welfare plan's financial statements, including when the reimbursement is not remitted to the trust; health and welfare plan accounting for ERRP reimbursements applied for prior to year-end but not approved until after year-end; accounting for the effects of the ERRP reimbursement on the health and welfare plan's post-retirement benefit obligation; and disclosures a health and welfare plan might consider including in its financial statements related to the ERRP.

    Click here to order the AICPA Technical Practice Aids.
    Technical Assistance
    If after consulting the above resources you still cannot find answers to your accounting and auditing technical question, contact the AICPA's Accounting and Auditing Technical Hotline by submitting your question electronically using the Technical Inquiry Form (accessible through the link below) or by calling the Technical Hotline at 1-877-242-7212.

    Click here for AICPA Technical A & A Hotline Inquiry Form

    For AICPA ethics or independence issues access the AICPA Professional Ethics Hotline by calling (888) 777-7077, menu option #5, followed by menu option #2, or e-mail at ethics@aicpa.org.
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    Sincerely,
    AICPA Employee Benefit Plan Audit Quality Center
     

     
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